China's RE Exports in April; Rainbow's "O"; WSJ And LCM; LEM's License Trouble; Ucore's Anonymous Client; MP's Q1 Analyst Call; And More
2021 Rare Earth May 10
China monthly rare earth exports:
Annualised 2021 China’s RE exports may turn out to be same or higher than 2019.
As always, double digit month on month changes of RE exports are normal, which rests in the nature of goods exported:
Regarding our previous post on Rainbow: While Rainbow’s announcement appeared to be a mathematically incoherent assesssment of rare earth oxides to total rare earth oxide per drill hole, it is actually OK.
Reason: The top line here marked in blue does not refer to the rare earth oxides, but to the elemental rare earths (e.g. Ce and not CeO2), whereas “TREO” refers to total rare earth oxides:
The math don’t add up, as the mass of elemental rare earth and rare earth oxide is different, a conversion factor per rare earth element applies, which Rainbow chose to leave out of the table in their announcment.
What is missing: For Nd to Nd2O3 the conversion factor is 1.1663893511 and for Ce to CeO2 it is 1.2285184128, for example.
Applying only these 2 factors to Nd and Ce in above chart leaves only a gap of ~6%, which contains the conversion factors of the rest of elemental rare earths to rare earth oxides.
How the average Rainbow shareholder is supposed to understand contents of such announcements completely escapes us.
It was Geomega’s CEO Kiril Mugerman who spotted it first. Our thanks for that.
Meanwhile, several news reports indictate, that Rainbow’s trouble in Burundi must be related to a rework of the mining code enacted in 2013 and amended in 2016.
Not a word about it from Rainbow. We hear from a trusted contributor that senior staff of Rainbow in Burundi may have departed.
In the 2020 Rainbow annual report non-current assets in Burundi (exploration and evaluation assets, property, plant, equipment, right of use assets) accounted for US$ 8.6 million.
In the foot notes the annual report says:
FinBank SA hold security over the fixed and floating assets of Rainbow Mining Burundi SA…
In other words: If Rainbow has a problem, Burundi will have a problem as well.
A WSJ video on rare earth below. A bit superficial, a couple of decades too late, as the West has long moved beyond rare earth dependence. Today the West’s dependence is on Chinese permanent magnets and on the products that are made with these magnets.
Reversed transfer of know-how
Good to learn from the video that LCM harvest know-how from China, for once know-how is flowing in the opposite direction. It is nice publicity, but it may also raise eyebrows in Beijing, where everything and anything about China in foreign media is being monitored around the clock.
If in rare earth, do observe Moscow Rules.
The merry old issue
It is no surprise when Ian Higgins says that LCM can’t beat the metal prices from China. LCM pay the international market price for rare earths, which includes 13% China VAT. China domestic VAT is in-out consumption tax, cost neutral, but there is no VAT refund upon export (退税 “tax rebate”) for rare earths.
Consequently China domestic cost of rare earths towards China domestic peers of LCM are effectively 13% lower than LCM’s raw material cost.
New RE supply won’t improve prices for RE users
The China export price for rare earth is the benchmark price for junior RE miners, and that includes 13% China VAT, so expect no competitiveness improvement for international rare earth users based on supply from non-China RE producers.
We reiterate (for the umpteenth time)
This selective VAT refund upon export scheme applies to most raw materials from China. This has been known to politicians and governments in the West for ages, but they don’t (want to) understand, that this Chinese VAT refund upon export system is at the core of the hollowing out of non-China economies.
We view this selective VAT refund upon export issue as the root of all China trade problems, not some imaginative subsidies. China’s subsidies to rare earth producers pale before these 13%.
No deal
Any investment agreement and any trade agreement with China is not worth our breath, if it does not deal with this massive trade manipulation.
Joerg Wuttke, chair of the EU Chamber of Commerce in China, says that the EU-China Comprehensive Agreement on Investment, concluded on December 30, 2020 after 7 years of negotiation, was the best achievable.
If this was so, then it would have been better not to conclude.
The ratification of the agreement is on hold anyway, as an infuriated Chinese government chose to reciprocate EU sanctions on its Xinjiang-related officals.
Leading Edge Materials mining license application for the Norra Kärr depost was struck down by the Mining Inspectorate of Sweden.
LEM’s exploration license, however, remains valid.
Actually, long before Tasman Metals and LEM, the Swedish government had designated Norra Kärr as an important national asset but was unsuccessful in having the area delimited from the environmental Natur 2000 protection code.
The company Boliden had the permit to mine the area for zirconium and hanfium in the 1990s, but except for 2 trials never went into commercial production. Boliden let the license lapse in 2001.
It seems that mining rare earths within the EU and EU affiliates is in fact neither possible, nor is it actually wanted. The EU is on an impossible quest to produce rare earth without chopping down a tree, no species inconvenienced, with no tailings, without undesireable radioactive waste for permanent disposal and on top of that - of course - carbon neutral, all in the name of sustainability ideals.
Even if the EU Commission or the Swedish government were to support RE mining in earnest, there are countless groups and initiatives who instantly go legal on any mining or whatever other extraction project.
What these groups and individuals completely fail in understanding is, that it would be better to produce in the EU under compliance with stringent conditions rather than allow yet another environmental disaster to happen in a distant country, like a repeat of Asia Rare Earth/Mitsubishi Chemical in Bukit Merah, Malaysia, the ongoing Krasnoufimsk problem, the backwaters of Kerala in India, southern China and the ongoing problem in Myanmar, to name just a few. A new potential problem in Angola rather than in Yorkshire is only waiting to happen.
Ucore published news that
“a mining company (the “REE Producer”), located in a US-allied country whose principal product from its current mining operations is a mixed rare-earth element concentrate”
has agreed to test Ucore’s subsidiary’s process.
It is not difficult to understand who the “REE Producer” is and why there is need for anonymity.
It is good news that the process is being tested in the wild, if or not it has merit for 3rd parties. If there should be merit it could be the start of an interesting development, provided neither party tries to eat the cake before it has been baked.
MP Materials published their Q1 numbers, hoping these are glorious enough to make the dark-red results of 2020 forgotten and entertaining analysts to a call, during which the MP team was clearly struggling for specific answers to specific questions.
Currently this business of shipping rare earth raw material to their single customer Shenghe Resources in China (via their Singapore office) runs extremely well.
There are these plans for MP to go downstream, coined Stage II and Stage III.
Stage II, currently being pursued for completion 2023, is the production of rare earth compounds, notably NdPr oxide. There are 4 types of NdPr oxide, of which MP would turn out one, hopefully matching China quality.
This MP will have to achieve alone, as the technical assistance agreement with China’s Shenghe Resources was canceled last year. MP’s confidence - if anyone understands rare earths it is us - is impressive…no, it is actually worrisome.
Stage II is a one-way street with no turning back. In view of Chinese punitive duties on MP’s Stage II products, export to China - where almost 90% of the market potential for Stage II products is - will be no option, the product will have to “go west”.
In general, different from what MP try to sell to analysts, rare earths are not commodities and they are unhedgeable. The question, if or not the output of MP’s Stage II can actually be sold profitably outside China from 2023, deserves a much closer look, particularly because China and Lynas are almost certain to move strategically and firmly lock-in potential ex-China customers of NdPr.
Considering potential impact of Murphy’s Law, placing the product may still be done by Shenghe Resources and not by MP themselves:
Source: MP Materials Form 10-K for the fiscal year ended December 31, 2020, page 87 ff
While CEO Litinsky so far has accomplished everything he set out to achieve, the achievement was on his hometurf, Wall Street.
Investment banking competence may be of lesser help on this quest to get the Stage II product sold outside China.
The right man for the job happens to have the same initials as the company’s name.
As aniticpated, the stalemate continues and prices go softer across the board, nonetheless the gains since last year October remain nothing short of breathtaking:
As ever, these are ex works China prices incl. 13% VAT (non-refundable upon export), converted at the current US$-RMB exchange rate.
Thanks for reading and have a great week ahead!
//Companies
Mkango on song at Songwe
Mkango Resources Ltd (LON:MKA, TSX-V:MKA) shares rocketed 46% to 30p after it said it is capable of producing significantly higher recoveries and concentrate grades from the 51%-owned Songwe Hill rare earths project in Malawi than previously expected.
The revised estimates came after it had analysed the results of a flotation pilot plant programme.
Arafura Resources’ (ASX:ARU) Nolans Project in line for govt. funding
Australia's federal export credit agency, Export Finance Australia (EFA), has inked a non-binding letter of support that proposes a funding package for the Nolans project.
Essentially, EFA is willing to provide a senior debt facility with up to $200 million in available funding. The facility will run over 15 years and is, of course, subject to a wide range of conditions.
More broadly, Arafura says the package will cornerstone a broader banking debt facility — something the company is progressing with a bevy of commercial banks and export credit agencies outside Australia.
//Market
Magnet rare earth oxide market to increase fivefold by 2030 – report
A new report by Adamas Intelligence forecasts that the market for magnet rare earth oxides will increase fivefold by 2030 to US$15.65 billion from the current US$2.98 billion [$2.98 bio much too low considering current prices].
Underpinning this growth is total magnet rare earth oxide demand, which is forecast to increase at a compound annual growth rate of 9.7%, and prices, which are projected to increase at CAGRs of 5.6% to 9.9% over the same period.
Shortages in raw materials are also expected to play a role in the rare earth oxide market, the report says.
“Constrained by a lack of new primary and secondary supply sources from 2022 onward, Adamas Intelligence forecasts that global shortages of neodymium (Nd), praseodymium (Pr) and didymium (Dy) oxide (or oxide equivalent) will collectively rise to 16,000 tonnes in 2030, an amount equal to roughly three-times Lynas Corporation’s annual output, or three-times MP Materials’ annual output, of neodymium and praseodymium oxide (or oxide equivalents),” the report says.
The market researcher also sees the undersupply of Nd, Pr and Dy oxide generating global shortages of NdFeB alloy and powder, which will amount to 48,000 tonnes annually by 2030 – roughly the amount needed for about 25 to 30 million electric vehicle traction motors.
Electric traction motors, commercial EV traction motors and electric bicycles, motorcycles, and scooters are expected to be jointly responsible for 23% of total global demand for NdFeB alloys and powders by the end of the decade.
Comment: In order to turn out such massive new quantities of magnet materials from mining, the overproduction of other RE “by-products” must go stellar. For increasing magnet material ouput only, recycling of end-of-life magnets must probably play a much larger role.
//Politics
China Is a Paper Dragon
Surely China is winning the industries of the future? Not really.
Chinese firms’ total spending on R&D as a percentage of sales revenue stalled at levels four times below the average for American firms. … Chinese firms remain dependent on foreign technologies and manual labor and have a rudimentary level of automation and digitization: on average Chinese enterprises have just nineteen robots per ten thousand employees; U.S. firms, by contrast, use an average of 176 robots per ten thousand employees.
But isn’t China sprinting to overtake the United States? Yes, but it’s stumbling badly in that pursuit.
China now leads the world in retractions of scientific studies due to fraud; one-third of Chinese scientists have admitted to plagiarizing or falsifying results (versus 2 percent of U.S. scientists); and two-thirds of China’s R&D spending has been lost to corruption.
Undergirding these examples and dozens more like them is Beckley’s clarifying theoretical insight: Repression is expensive.
Kevin Kearns: Biden’s 'Made in America' must be mined in America
Consider electric vehicles. Biden hopes to replace the federal government’s fleet of 645,000 vehicles with American-made EVs. He’s also pledging $174 billion to incentivize EV purchases and to put 500,000 charging stations on the nation’s roads. Biden sees this as a job creation effort, but America’s current EV supply chain—everything from lithium-ion batteries to the resources needed for electric motors — simply isn’t located in the United States.
China is on top of EVs, though, and already has 148 battery mega-factories. Beijing also maintains a vise-like grip on the key metals—such as lithium, nickel, cobalt and graphite — needed to produce EV batteries. In contrast, the U.S. has fewer than a dozen such battery factories in the pipeline and just one operating lithium mine.
The irony is that the United States possesses vast mineral resources with an estimated value of more than $6 trillion. But while nations such as China have made mining a strategic priority, Washington has largely maintained an adversarial approach to mineral production. And so, unless federal policies change in favor of U.S. mining and materials processing, Biden’s electric vehicle agenda could end up subsidizing China’s industrial ambitions. It could also increase America’s mineral import reliance, which has doubled in the past two decades.
Australia approves A$100m in tax incentives for junior miners
The Australian government announced that it will contribute A$100 million to extend the Junior Minerals Exploration Incentive four more years. The program allows eligible companies to access tax incentives to attract new investors.
“The Coalition Government will continue to support our junior mining companies and encourage exploration and development of new resource deposits,” Keith Pitt, Minister for Resources, Water and Northern Australia, said in a media statement. “We need to ensure that we have a continuous investment pipeline for development across regional Australia.”
EU halts investment agreement and curbs Chinese state-owned enterprises
One key point contained in the draft agreement limits Chinese state subsidies to home grown industries, which the EU claims tips the market balance damaging European companies. With the new bill, the European institutions have decided to unilaterally resolve the matter.
In the future, the European Commission will be able to investigate and, if necessary, block foreign investments in European companies with profits exceeding €500 million, made by investors who have obtained state subsidies above €50 million. The measure applies to every foreign company, but Chinese state giants are the real target.
The EU also has imports of raw materials (especially rare earths) and pharmaceutical items from China in its sights. There are 34 products in these two sectors that the bloc is forced to import – half of them are of Chinese origin. The new industrial policy aims to decrease this dependence.
//Recycling
Multi-resource comprehensive utilization technology to improve the efficiency of rare earth resource mining
The sulphuric acid slurry decomposition process of mixed rare earth concentrate adopts the synergistic effect of weakening the concentration and increasing the ratio of mineral acid (alkali), and is supplemented by the cyclic decomposition strengthening technology, using sulfuric acid solution and sodium hydroxide solution to decompose fluorine and phosphorus minerals. While extracting rare earths, it is a new technology for comprehensive utilization of multiple resources to realize the comprehensive recovery of co-associated fluorine, phosphorus, silicon and other resources and the recycling of acid and alkali.
Bayan Obo mixed rare earth concentrate is mainly composed of bastnaesite and monazite, and is one of the globally recognized refractory minerals. Wang Zhe, a researcher at the Institute of Hydrometallurgy of Baotou Rare Earth Research Institute, introduced that they applied this technology to treat Bayan Obo mixed rare earth concentrate and found that sulphuric acid slurry decomposition can selectively decompose bastnaesite preferentially and control the fluorine in monazite to be less than 0.5 %, the sulfuric acid consumption per ton of rare earth oxide products becomes less than 1.25 tons. The amount of radioactive waste slag is greatly reduced, and high reflectivity materials are prepared by decomposing and recycling phosphorus byproducts. At the same time, it enables the recycling of acid and lye.
This process is not only applicable to Bayan Obo rare earth concentrate, but also to Sichuan bastnaesite, Mountain Pass mixed rare earth mine in the United States, and Bayan Obo low-grade fluorite ore.
At present, the slurry decomposition project has built a pilot line with an annual processing capacity of 1,000 tons in Northern Rare Earth Group. With the continuous advancement of test-expansion research and the gradual resolution of the connection problems of various processes, the application of this technology will be broader, and the social and economic benefits will be more significant.
Comment: “Comprehensive resource utilisation enterprises” operate mostly tax-free.
//Technology
MAHLE’S REVOLUTIONARY MAGNET-FREE ELECTRIC MOTOR TO GAIN GROUND SOON
Official reports suggest that the central feature of the new motor is the inductive which enables contactless power transmission, allowing the motor to operate wear-free and effectively at higher speeds.
In fact, the efficiency has been claimed to be above 95% at almost all operating points- a level which has only been achieved by Formula E racing cars till date.
According to the credible sources, the new electric motor is also characterized by increased resilience, as the necessary transmission of electrical currents between stationary and rotary parts inside the motor takes place without contact, ensuring wear-free movement.
How Fresh is Your Fish? A Chameleon Skin-Inspired Hydrogel Can Tell You
The skin of a panther chameleon has an amazing ability to display rich and brilliant color changes due to the organization of different iridophores into a core-shell structure. Inspired by this color-changing ability, a team of scientists designed an artificial color-changing material that mimics chameleon skin. The hydrogels have multi-luminogens organized into different layers instead of one uniform matrix. The findings demonstrate that a hydrogel system developed with this design can detect seafood freshness by changing color in response to amine vapors released by microbes as fish spoils. The material may also be used to advance the development of stretchable electronics, dynamic camouflaging robots, and anti-counterfeiting technologies.
This core hydrogel was incubated in various aqueous Europium solutions, after which the gel was incubated in a growth solution containing sodium alginate and responsive blue/green fluorescent polymers. Spontaneous diffusion of Europium ions from the core hydrogel into the surrounding solution triggered the formation of blue and green hydrogel layers.
Because of the way that the core and shell layers of the hydrogels overlapped, they could change from red to blue or green when triggered by changes in temperature or pH. The authors also noted that the emission color of the blue and green fluorescent layers could be adjusted, enabling the material to display colors from nearly the full visible spectrum.
//Trivia
Minnesota's magnet fishers seek sunken treasure, be it antique tools or guns
Long before next week's fishing opener, a few Minnesota anglers were avidly casting lines into the water and hauling in hefty catches.
But they weren't hooking walleye, bass or northern pike. They were hoping to reel in an antique metal sign, a safe full of money, maybe even a gun.
It's part of a new, and admittedly niche, sport of magnet fishing, where you "fish" with a super-powerful magnet tied to a strong line.
Most of the time, magnet fishers pull in mundane scrap metal: old nails and bolts, a length of rebar, fish hooks, beer bottle caps. But every once in a while, they might get a bite that turns out to be a submerged bike, an abandoned shopping cart or a Lime scooter that went for a swim.