China RE Quota Up 20%; Update On RareX-Shenghe; Post-Spring Festival Rare Earth Prices Keep Climbing; US Dependence On China RE At Least 85%; Interdependencies And Flawed Concepts

2021 Rare Earth February 20

China’s MIIT published the first half 2021 rare earth quota, up 20% over first half 2020:

A conservative approach.

Update on our RareX-Shenghe Resources post: Today the Baotou Rare Earth Exchange carried a Chinese translation of a Stockhead article on the subject.

Shenghe did not officially publish the news, but posted their business development plan 2021-2021 online:

Current Shenghe capacity is 15,000 tons/year rare earth separation, 12,000 tons/year rare earth smelting and 500,000 tons/year mineral sands processing.

On the second trading day after Chinese New Year key rare earth oxide prices closed higher from the last trading day before Chinese New Year:

On Thursday most of China’s listed rare earth companies’ share prices rose significantly:

Magnet maker shares also rose a bit also on Thursday:

We had a brief look at 2020 trade numbers and find them unsuitable, owing to COVID-19 impact, so for today we will take numbers of a “normal” year, 2019.

In 2019, 5 countries made up 75% of China’s RE exports, whereas China’s share of these 5 countries/regions rare earth imports was in average 65% (!):

Imports under the HS-code heading 2846, rare earth compounds

The value of imported rare earth compounds to the US was US$ 152 mio in 2019. In the same year, the US exported rare earth compounds in the value of US$ 85 mio (rare earth raw materials from MP and catalyst sales to China).

How this works: There are rare earth circulating after conversion to a product, e.g. cerium to polishing powder from Italy, neodymium to catalyst from South Africa, lanthanum and cerium to FCC from Germany, etc, that is how the strange origin’s come into being.

So strictly going by origin where the raw material was made, China’s average share of rare earth imports should be higher, and that includes USA:

US RE imports from Austria, South Africa, Japan, Germany and Estonia are certainly for most part made from China’s rare earths, with a share of Russia origin material. The real US dependence on imported China RE in our view is therefore >85%, not just 78%.

The following entry is difficult, because we can’t exclude the possibility that mind-over-matter socialist fire & brimstone preachers may be at work. However, at this time our take is, that this is a nonsensical hype, coming from a highly questionable source.

Under the headline China targets rare earth export curbs to hobble US defence industry the Financial Times once again warmed up the rare earth embargo conspiracy theory and South China Morning Post tried to hop on to the hype train, clinging on to the possibly worst of all available sources, Global Times, the Breitbart of China, featuring editor Hu Xijin, the Steve Bannon of China.

However, in the article itself FT already qualify, that the question may have supposedly been raised to rare earth industry executives in order to see, “how badly companies in the US and Europe, including defence contractors, would be affected if China restricted rare earth exports during a bilateral dispute.”

Assuming it is “fresh” news, what should be the purpose to “leak” this to the foreign press? And why does the FT come up with it ahead of the usually news-starved Chinese New Year holidays? Fill pages?

If the contents of the FT article should be correct, then China’s government must be demented or otherwise intellectually challenged, as the very same question had been raised and answered exhaustively quite a while ago.

The situation since is unchanged and throwing up the RE embargo question is beyond absurd:

  • Defense contractors: There is no evidence, that western defense companies directly buy rare earth oxides as such, while 417.5 kgs rare earth per F-35 (inclusive of ~70% iron oxide in the magnets, or exclusive?) are evidence that western defense contractors may externally procure permanent magnets and components made of rare earth. A rare earth export stop without stopping magnet exports at the same time would quite possibly be non-consequential.

  • Export dependence: In general a rare earth export embargo would cause significant damage to the Chinese rare earth industry, as 30%-40% of its output is for export, classic export dependence, in spite of no VAT refund upon export.

  • Import dependence: If China should embargo RE exports, the rest of the world may cut off China’s supply for rare earth raw materials such as monazite, bastnaesite, xeonotime and rare earth carbonates. That dependence has actually worsened during the the past two years, partly by resource preservation, partly by resource tax not applying to rare earth raw material imports, making imported RE raw materials economically very attractive.

  • How should the West react: Perhaps with a complete embargo of semiconductors to China, which most certainly also end up in equipment used by the People’s Liberation Army?

Last, but not least: You do it once and you shall be forgiven. You do it twice and there won’t be an opportunity to do it a third time.

Overall not a very enticing scenario for Beijing, whose top leader still likes to portrait itself the harbinger of globalisation and free trade.

We fully empathize with China’s dismay about what may be interpreted as a Western return to “Opium War Thinking”, but that is not an issue that would be solved by playing trade war and other war games.

And FT should stop treating warmonger Hu Xi Jin of Global Times as an authoritative source, even at times when real news are hard to come by.

Thanks for reading and we hope for all of us that the Year of the Metal Ox will actually be a metal bull year!


Biden Wants the Government to Run on EVs. It Won’t Be Easy

According to the General Services Administration, the federal government owned 645,000 vehicles as of 2019, just 3,200 of them fully electric and 1,260 gas hybrids. That’s a tiny fraction of the 280 million vehicles that traveled on US roads that year. Of the 17.1 million vehicles sold in the US in 2019, just 1.4 percent were fully electric.

Russia Sets Record for Non-Resource-Based Exports Third Year in a Row

In a related development, Russian business newspaper RBK reported Wednesday that Russian exports under closed articles of customs statistics, which include military equipment, dropped 16 percent in 2020 to $11.48 billion from $13.6 billion in the previous year.

Along with military equipment, this figure is said to include civilian helicopters and airplanes, rare-earth metal compounds, and some nuclear-related materials. China, India, Algeria, and Egypt were listed as the biggest purchases of Russian weapons over the past year. The newspaper attributed part of the decline to delays or cancellations of contracts caused to "various circumstances provoked by the pandemic."

China-developed hydrogen-fueled hybrid locomotive rolls off assembly line

According to Zhao Mingyuan, deputy general manager and chief engineer of CRRC Datong, the locomotive is designed to travel at a speed of 80 kilometers per hour, with 700 kilowatts of continuous power for 24.5 hours. Its maximum traction load on a straight track exceeds 5,000 tonnes.

"Test run data shows that the energy conversion efficiency of hydrogen fuel cells is significantly higher than that of traditional internal combustion engine units," Zhao said. "By formulating a reasonable energy management strategy, the locomotive can achieve the optimal energy output." 

"In the field of transportation, harnessing hydrogen fuel has become an important direction for industry development," Zhao said, adding that hydrogen fuel has so far been successfully applied in technologies relating to aerospace, automobiles, urban trams, and other fields in China.

Explainer: Possible impact of Myanmar coup on China's metal and rare earth supply

There has been no sign of disruption for now, since Myanmar’s rare earth mines are under the control of autonomous militia groups, but the test will come after the Lunar New Year holiday, which begins at the end of this week.

Comment: The good, old, time-honoured rare earth scoop-seeking and fear mongering.

Japan to station coast guard vessel at Ogasawara Islands to check Chinese influence

Last year, in the month of January, Tokyo lodged a protest against Beijing through diplomatic channels after a ship operated by China's State Oceanic Administration was monitored within Japan's EEZ around Okinotorishima.

The survey vessel may have been attempting to investigate the natural deposits beneath the seabed, including oil and gas, although analysts also believe it may have been mapping the deep water passages that would permit China's growing fleet of submarines to sortie into the Pacific, SCMP reported.

Meanwhile, Japan insists its most southerly atoll should be recognised as an island and, therefore, allow it to claim the surrounding 400,000 square kilometres as its EEZ. Not only are these waters important fishing grounds, but research has indicated significant natural resources - including rare earth metals - beneath the seabed.

China, Korea and Taiwan insist, however, that Okinotorishima is an atoll that has been artificially built up and is just 16cm above the high tide level. Given that, they argue it does not meet the United Nations' definition of an island - primarily that it is large enough to support human habitation - and that Japan therefore has no right to the surrounding waters, SCMP reported.

Comment: The TREO content of sea-floor rare earth deposited at Okinotorishima and Minamitorishima is not that great. The TREO content is somewhat comparable to the phosphogysum waste from phosphate fertilizer production. There are millons of tons of phosphogypsum right here at the surface and you don’t need to bring it up 4,000 m to the ocean surface at enormous cost.


Northern Minerals (ASX:NTU) raises $20M for project development

Northern Minerals (NTU) has entered subscription agreements with various investors to raise $20 million via a private placement.

The heavy rare earths producer entered a trading halt on February 12 but did not disclose how much it intended to raise.

More than 408 million subscription shares were issued to sophisticated and institutional investors at 4.9 cents.

Comment: This is exactly the amount, that China Northern Rare Earth Group wanted to invest in Northern Minerals, but were denied by the Australian government. Norther Minerals sit on a smallish deposit of xenotime, that has a proportionally high content of heavy rare earth. China Northern Rare Earth Group’s Bayan Obo mine lacks these heavy rare earth, which somewhat limits China Northern Rare Earth Group’s ability to steamroll competitors in the China market.

Australian Bauxite Ltd Rare Earth Elements Update

- Clays at Binjour bauxite deposit in QLD were found to contain soluble REE and ABx's exploration technology was used to identify other REE prospects in Eastern Australia

- Two Tasmanian prospects, DL130 and Fingal Rail, were identified and REE assay results for 26 random drillhole samples have shown that DL130 is enriched

Comment: 0.006% or 0.04% is too low, even if ionic clay. Lets see, if they can come up with a 30% TREO concentrate.

Lotus Resources discovers high-grade rare earth oxides at Kayelekera Project in Malawi

Lotus Resources Ltd has found high-grade rare earth oxide (REO) material up to 16% total REO and 3.4% critical REO at the Milenje Hills prospect, 2 kilometres from its Kayelekera Uranium Mine in Malawi, after a preliminary low-cost exploration program. 

Greenland Minerals extends Kvanefjeld public consultation period

Greenland Minerals Ltd, in consultation with the Government of Greenland, has extended the period for the public consultation hearings for its Kvanefjeld Rare Earth Project to 1 June 2021. 

COVID-19 pandemic restrictions have created logistical challenges around travelling and holding public meetings and information forums. 

Comment: GGG want pretend it was their initiative to gracefully permit the Greenland government to extend the consultation period? Seriously?

Phalaborwa assay results confirm high-grade nature of mineralisation

The results confirmed an average in situ grade of 0.50% total rare earths oxide (TREO).

There is an average in-situ combined grade of 0.15% neodymium and praseodymium (NdPr) oxide, representing 29.7% of the TREO grade reported in the rare earths basket.

Rainbow notes that 29.7% NdPr represents one of the highest weightings of NdPr in a rare earths basket of any project in the world.

Comment: Ceritech, REEtec/Yara and Mosaic have gone down the very same path. Perhaps current prices levels warrant another look.