DoD Phase 1 up in smoke; Regulator Questions; Rising Share Prices; Another Senkaku Incident looming?;Escalated Trade Frictions; Concentrate from Tailings; Neodymium for ArtificiaI Intelligence;
Rare Earth 2020 Week 23
|Jun 3, 2020|
An interesting week.
Having had its announcements questioned by regulators, Lynas admit what we had already anticipated, that the meanwhile withdrawn US Department of Defense “award” was merely for paperwork, involving an insignificant amount of money. Meanwhile, the market is keenly waiting for answers from Lynas regarding the financing of the Kalgoorlie investment and the building of the permanent disposal facility for the ca. half a million tons of low radiation waste stored at Lynas Malaysia factory.
China analysts published an assessment of how the rare earth market looks moving forward. We are still evaluating the contents at the time of this writing.
Japan notes increased aggression by China’s coast guard around the Senkaku islands, the same uninhabitable rocks in the ocean, squabbles over which were the root cause of the first rare earth crisis.
A hitherto unknown company, Altona Energy, enters MOU with Akatswiri Mineral Resources for the Chambe ionic clay RE deposit in Malawi. This is the project of former Gold Canyon, later Irving Resources, which was apparently given up and is now for grabs. An NI43-101 for Chambe was published at Sedar on Dec 7, 2011.
Meanwhile, Bloomberg claims that China’s rare earth companies share prices have risen dramatically on the US-China trade conflict escalation. Probably, it is more of a recovery of rare earth share prices.
Thanks for reading.
Lynas notified the market on April 22 it had been chosen to receive the funding, and said it then became aware that the U.S. defence department had put the funding for the facility on hold on April 29. It said it did not immediately inform the market of the pause because it did not consider the news material.
The Phase 1 work for the project would at most cost A$2 million ($1.3 million), Lynas said, which it did not consider "to have a material effect on the price or value of its securities".
Miners of rare earths snapped back to life in May, with China Minmetals Rare Earth Co.’s 27% rally leading double-digit monthly gains across the sector. Used in products from electric vehicles to military hardware, prices of the metals surged last spring on speculation China would use it as a bargaining chip in its trade war with the U.S. China produces about 70% of the world’s mined rare earths.
“There’s short-term logic behind the play,” said Ji Yongfeng, a fund manager at Shanghai Raymond Asset Management Co. “Rare earths are a necessity in some of the most important sectors, especially new-energy cars, so it’s not entirely a speculative trade.”
The sector surged in May last year on Trump’s initial tariff threats. A month later, China said it was looking at export controls on rare earths, though no measures have been implemented to date. The pandemic may slow U.S. efforts to cut reliance on China for supplies.
Comment: CCP general secretary Xi visited a permanent magnet factory in April last year. JLMag are a rare earth consumer, *not* a rare earths producer. A rare earth embargo would not even remotely have the impact that a permanent magnet embargo would have on the US. Neither is likely to happen, as China waits out the end of the current administration’s term.
Minmetals 27% percent “rally” is merely a share price recovery:
LKAB is developing technology to recycle mine waste to produce phosphorus mineral fertilisers, rare earth elements (REEs), fluorine and gypsum, in a project called ReeMAP. The first step is to use the mine waste to produce an apatite concentrate, something LKAB is now doing in their pilot plant.
”We estimate that a full scale production from Malmberget and Kiruna will produce around 400,000 t of apatite concentrate annually, in two plants that will be of similar size to our existing iron ore concentrating plants. When we can be up and running depends on the technical developments and the pre-engineering, but also relies heavily on external factors such as environmental permits. Our objective is to recycle our mine tailings to critical raw materials, and the sooner the better,” Leif Boström concludes.
Comment: Good effort, but what to do with the thorium?
The chart of the VanEck Vectors Rare Earth/Strategic Metals ETF (REMX) shows that after hitting a high of $346.92 in 2011., the shares fell to a new low of $23.91 on March when the stock market and commodities prices were under siege because of the risk-off conditions caused by the global pandemic. REMX was at $33.25 per share on May 27. While the ETF recovered with the stock market in April and May, the bearish trend continues, and the shares were not far above the recent low and were still at a level that was under 10% of the 2011 peak.
REMX has net assets of $126.87 million, trades an average of 43,551 shares each day, and charges an expense ratio of 0.60%. If the prices of rare earth minerals and metals are going to move higher over the coming months and years, REMX, at its current price, is a bargain.
According to industry online data, the upcoming new energy efficiency standard will change the old 1 to 3 products to 1 to 5 products. The energy efficiency requirements of air conditioners will be further improved, and the performance of ferrite may be even more deficient. The penetration rate of NdFeB in the field of inverter air conditioners are expected to continue to increase.
According to the installed capacity of 65GW of new wind turbines in the world by 2021, assuming that the direct drive permanent magnet motor penetration rate reaches 36%, it is expected that the demand for NdFeB will increase by more than 15,700 tons, and the demand for NdPr, dysprosium and terbium will be 4,703 t, 118 t and 78 tons.
According to chief executive officer Pini Althaus, the rare-earth supply chain actually consists of four distinct stages: mining, processing, metals and alloys production, and magnet manufacturing. USA Rare Earth wants to perform all four of those steps within U.S. borders, something that has never been done before.
The Round Top project takes care of the initial mining stage. For processing, USA Rare Earth has opened a facility in Wheat Ridge, Colorado. For magnet production, it recently purchased the equipment of a manufacturing plant in North Carolina, formerly owned by Hitachi Metals America, Ltd.
The company doesn’t expect to surpass or even approach the level of rare-earth production in China. Last year, the U.S. purchased 12,000 metric tons of rare-earth magnets, or around 6% of the global market. If it maintains that level of buying, the country’s annual purchases will increase by more than 7,000 metric tons by 2027. USA Rare Earth is hoping to supply at least a portion of that product domestically.
Comment: Round Top has been in the works for more than 10 years and still has a long way ahead.
The bill, which contains provisions worth roughly $2 billion over 10 years, is the latest in a string of recent U.S. legislation attempting to craft a national strategy to produce more lithium, rare earths and other so-called strategic minerals.
The cornerstone of the bill is a provision requiring federal agencies to streamline the mining permit review process. It can take 10 or more years to get a mining permit in the United States, though the process in Canada and Australia typically lasts two to three years.
The bill would also require the U.S. Geological Survey to complete fresh studies of mineral deposits on federal land. Regulators would then have to weigh production of those minerals against other potential land uses, like recreation and conservation.
For Near-Term U.S. Decoupling From China For Rare Earth Elements, Options Are Limited–But They’re Out There
The problems with actually accomplishing the decoupling anytime soon, however, are twofold. The first is simple economics. As with so many different elements of our broader manufacturing supply chains, the one for REE products is a difficult one for domestic producers. The playing field isn’t level; those activities are harder in the developed world, due to elevated labor and production costs that are driven in part by our higher standards for things like worker safety and environmental protection. Meanwhile, China continues to heavily subsidize those industrial areas where it sees strategic benefits in market domination, and that won’t change. So we may have to be willing to accept higher prices to break free from an unreliable business partner.
Comment: Things would be easier, had the Trump administration not handed control of America’s only producing rare earths mine to China in 2017.
For all the attention that instances of possible Chinese economic punishment directed at Australia receive and despite serious political tensions since 2017, two-way trade currently stands at US$235 billion, a record high. This is more than 2.5 times greater than Australia's trade with Japan, in second place.
These market-driven outcomes do not rule out the possibility of niche areas where Australia-U.S. cooperation could pass some sensible cost-benefit test.
For example, questions have previously been raised around the resilience of supply chains for rare earth metals. The Productivity Commission could undertake an investigation and invite national security analysts to detail their concerns. If a problem is revealed, the Commission could then recommend appropriate government interventions.
The meeting is scheduled to be held on Thursday.
A strategy paper by Canberra on stepping up ties with India had suggested that Australia should be expanding the services relationship and develop a resources relationship that goes beyond raw materials exports. The critical materials sector would provide an ideal opportunity.
India has identified lithium, cobalt, nickel and rare earth metals as key to its future industrial plans and Australia is richly endowed with all of them.
Comment: According to IMF estimate, India’s GDP 2019 was US$ 2.9 trillion, while China’s GDP was US$ 14.1 trillion.
The U.S. government recently awarded contracts for heavy rare earth separation and issued solicitations for the processing of light separation and for neodymium magnets, which are used in Javelin missiles and F-35 fighter jets. Under current law, DoD cannot invest more than $50 million in DPA funds without additional congressional notification, but the Pentagon’s legislative proposal would raise this cap to $350 million, to invest in multiple projects.
These processes can be expensive, and the process for separating rare earth oxides can cost hundreds of millions dollars, Green said.
“The recent awards are like a drop in the bucket, for very small scale pilot programs. It’s nowhere near what they’d need to get a commercial facility, even to support DoD’s very small volume,” Green said. “They have to put big dollars in if they want to separate the oxide at a state-of-the-art facility that’s going to be anywhere close to Chinese pricing.”
The general observation would be that China took advantage of Japan dealing with the rising COVID-19 infections, by stepping up its offensive against the Senkaku Islands, which Beijing claims as Chinese territory. Alternatively, we could analyze it as the Xi Jinping administration adopting a more hardline stance on Japan as a diversion at a time of growing domestic dissatisfaction while the COVID-19 pandemic slows the Chinese economy. Based on available objective information, however, it appears likely that this incident was the result of a CCG policy of cracking down on foreign fishing vessels in East Asia generally.
We should also assume that the CCG crackdown on Japanese fishing boats will continue even after the fishing ban ends. The activities of CCG ships around the Senkaku Islands had already evolved markedly, even before the COVID-19 outbreak.
Comment: Even if the aim is a good one, the unilateral, extraterritorial application of Chinese law and acceptance thereof creates uncomfortable precedence. China’s policy for the South China Sea has been consistent for 20 years, we just didn’t see it coming, according to Brookings.
Already a year old, but not so well known.
Direct drive wind turbines feature generators that are fixed directly to the rotor and therefore turn at the same speed. Certain models (for example, those produced by Goldwind) employ a generator with permanent magnets consisting of rare earth minerals such as neodymium and dysprosium. Other models (for example, those produced by Enercon) use an electrically excited rotor utilizing significant amounts of copper. Direct-drive turbines tend to be initially more expensive per megawatt, although this can be offset by lower maintenance during the turbine’s operation.
Medium-impact minerals are not used in a wide range of technologies but are crucial components of specific technologies, such as neodymium for offshore wind and titanium for geothermal. Issues that threaten the ability of the market to meet this demand could severely impact the deployment of these specific technologies as well as change the shape of the low-carbon transition. In some cases, substitution and efficiency may be possible, as demonstrated in the case of neodymium for wind energy, but this may be limited in many instances. While this analysis, again, does not assess mineral supply risk, neodymium is a rare earth, and more than 70 percent of rare earths are currently produced in China.
The agreements include one gold exploration contract in Block (I) with Manhattan Mining Investment Co; three prospecting contracts with Blue Magnolia Ltd in Block (B) for bauxite and precious metals, Block (K) for gold, and Block (H) for gold, uranium, iron, bauxite, basic metals and rare earth minerals; and finally one prospecting contract with Shefagold in Blocks (N) and (O) for platinum, palladium, silver, chrome, copper, magnesium, phosphorus, iron ore and related minerals.
Supply chains for essential materials for public health emergencies make an obvious starting point for action. So does reassertion of control over vital domestically extracted minerals. Rare earth elements figure in everything from the technology of advanced consumer products to sophisticated weaponry. China already produces twenty-three of the 35 mineral commodities cited by the departments of Defense and of the Interior as “essential for U.S. economic and national security.”
Resuscitating mining and associated minerals processing in the US can help us resist China’s suffocating leverage. And, unlike other global mineral supply locations, the tools for correcting our situation lie within reach. Both the US and Canada have abundant reserves of cobalt, graphite, lithium, nickel and rare earths.
Easing lockdown has triggered a “more rapid recovery than expected” for diesel, with demand increasing dramatically. Rationing has been implemented in order to manage demand preserve stock, SAPIA said.
The petroleum body said unplanned shutdowns had contributed to the problem with inadequate stocks, but that this situation should be resolved by June 1.
The two refineries in Durban are starting up, SAPIA said, and on spec production is expected this weekend.
Comment: Diesel shortage is a problem for South Africa’s miners.
They're doing it with what's called "rare-earth-ion-doped fiber." Put simply, it's laser light pumping a silica fiber that has been infused with rare earth ions of holmium. According to Jas S. Sanghera, who heads the Optical Materials and Devices Branch, they have achieved an 85 percent efficiency with their new process.
"Doping just means we're putting rare earth ions into the core of the fiber, which is where all the action happens," Sanghera explained. "That's how we've produced this world record efficiency, and it's what we need for a high-energy, eye-safer laser."
According to Colin Baker, research chemist with the Optical Materials and Devices Branch, the lasing process relies on a pump source--most often another laser—which excites the rare earth ions, which then emit photons to produce a high quality light for lasing at the desired wavelength.
Spin glasses have been known to sometimes occur in alloys, which are combinations of metals with one or more other elements and with an amorphous structure, but never in pure elements of the periodic table. Surprisingly, Radboud researchers found that the atomic spins of a perfectly ordered piece of the rare-earth element neodymium form patterns that whirl like a helix but constantly change the exact pattern of the helix. This is the manifestation of a new state of matter called a ‘self-induced spin glass.’
With the advancement of AI and its large energy footprint, there is increasing demand to create materials that can perform brain-like tasks directly in hardware. “You could never build a brain-inspired computer with simple magnets, but materials with this complex behavior could be suitable candidates,” Khajetoorians says.