We missed it: Already on February 17, even during the Spring Festival holidays, China’s Hu Xi Jin, editor of Global Times, publicly backpedaled after the rare earth boycott story of Financial Times had raised eyebrows, apparently also in Beijing.

He was even made to go as far as to grudgingly acknowledge, that any such boycott would likely be ineffective.

That is almost a bit too much for a retraction from China.

The prices of NdFeB magnet materials zooming up, while lanthanum and cerium prices are sinking. La and Ce are overproduced, in order to produce enough NdFeB materials:

These are median exchange prices ex works China, RMB converted at the central bank daily RMB/US$ median exchange rate.

So how does physical trade compare?

Firm offers in hand for physical NdPr Oxide (75% Nd, 25% Pr) from well-reputed China rare earth companies from North, East and South China are US$88 - US$90/kg CIF Singapore.

The price development since beginning November last year:

Is this sustainable? Lynas’ 2020 Annual Report has this answer:

Strong Rare Earth prices, as well as real or perceived disruptions in supply, may create economic incentives to identify or create alternate technologies that ultimately could depress future long-term demand for Rare Earths.

We say: the hangover will be brutal.

Why: We laid out previously, that there is a tad too much capacity in NdFeB magnets in China because of a host of new-entrants, who together with the top dogs attack the very same downstream customers and wrestle for market share.

50% of NdFeB demand is automotive/EV, an industry notoriously recalcitrant and vengeful, when it comes to price increases.

Different from copper wires and connectors, NdFeB-based motors are not a must for EV.

Some, if not all EV makers may follow BMW in switching motors. If so, it would be the terminal end to stellar growth forecasts in NdFeB plus related REO and we’ll be back at single digit growth forecasts, with predictable consequences for rare earth prices.

Also watch out for the possible replacement of windtowers.

Our favourite rare earth consultant Argus just published an extract from the China rare earth import statistics: China raises US rare earth imports in 2020.

Ours and Argus’ numbers are different, perhaps because we included monazite.

Our friends and ardent supporters at the Rare Earth Industry Association sent this chart in their latest newsletter:

Now, when talking about permanent magnets, everyone is tunnel-visioned on NdFeB magnets, while the devil lives in the detail.

For example in direction to USA we can say with absolute confidence, that the overwhelming number of permanent magnet shipments from China are for dirt-cheap SmCo magnets.

To serve up some clarity in rare earth we’ll be at the Rare Earth Industry Association webinar on March 11, 2021, 13.00-15.00 (CEST) :

REIA Webinar on Rare Earth Market and Geo-Economics

China on the acquisition path, here a target list we received yesterday with some examples that heavily focus on rare earth nano-powder:

We wouldn’t be surprised about acquisitions related to coating of semi-conductor etching chambers.

Up and coming junior rare earth miners may face a market in which all principal endusers outside China will be China-owned, at least partly.

Why junior rare earth miners must include China in their sales plans and why exporting finished rare earth oxides to China will detrimental to profits, tune in on the REIA Webinar on Rare Earth Market and Geo-Economics on March 11.

Lynas FY 2020 gross profit rate was 15.7% in a low-price market plus COVID-19 damage, a very respectable number. However, cash flow from operating activities dropped to ⅓ of FY 2019 and significant depreciation & amortisation drove EBIT FY 2019 of A$56.4m down to a FY 2020 loss of A$6.2 mio.

Mrs Lacaze says in the annual report: In FY20 NdPr production was 4,656 tonnes and total REO was 14,562 tonnes. Mining Campaign 3 was completed at Mt Weld during the year, resulting in approximately 560,000 tonnes of ore extracted.

That means net recovery of 2.6% as REO. Mt Weld CLD used to be one of the highest TREO grades worldwide at almost 9.72%. We wonder what the TREO content of 2020 input material was.

Today Lynas’ half year result came out, beating expectations of optimistic analysts by 56%. Well done!

Thanks for reading, have a great weekend!

//Companies

Vital Metals (ASX:VML) prepares for production at Nechalacho

Vital Metals (VML) is on track to begin rare earth production at its Nechalacho Project in 2021’s second quarter.

Vital Metals expects to begin ore sorting operations at Nechalacho during the second quarter of the 2021 calendar year. Once production commences, the company will be the first rare earth elements (REE) producer in Canada, and the second REE producer in the North American continent.

The fabrication of various equipment and infrastructure, such as feed hoppers, conveyors, and stackers is complete. These parts, along with an air compressor, receivers, and dryer, are now being transported to Yellowknife, and should reach Nechalacho in March. 

Comment: Lets hope, the bits and pieces also fit together. Vital’s early start would be an egg in the face of all the junior rare earth dinosaurs.

Australia's Iluka Resources eyes downstream processing of rare earths

The Perth-based company indicated that the endeavour could be the Phase 3 development of its Eneabba operation in Western Australia, adding that it has commenced a feasibility study for a fully integrated rare earths refinery.

Iluka's Eneabba operation is one of its main rare earths undertakings with the commissioning for Phase 2 of the project scheduled for the first half of 2022.

Comment: Another egg in the face of junior rare earth dinosaurs, if it happens. However, in refined rare earths Iluka will be completely out of their commodity element. It is not as simple as some junior RE miners presentations make it look like.

Hastings Technology Metals : Cadence Minerals Plc - Update on Yangibana Rare Earth Project and Joint Venture Partner Funding to Accelerate Construction

Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note that Hastings Technology Metals (ASX:HAS) ('Hastings'), Cadence's joint venture partner at the Yangibana Rare Earth Project in the Gascoyne region of Western Australia ('Yangibana' 'Yangibana Project'), has received commitments to raise $100.7 million through an equity placement.

The placement's net proceeds will be used to advance development of the Yangibana Project in the Gascoyne region of Western Australia.

The definitive feasibility study published in 2017, modelled two production scenarios the second of which had included within it 808,000 tonnes of plant feed from one of our joint venture areas (Yangibana) in year 6. This production target and additional production target from the definitive feasibility study indicates that 11% of the plant feed will come from our joint venture area[1].

Comment: The definitive feasibility study has never been published. A highly edited version of what may once have been a feasibility study was published as an “executive summary” (we analysed August 4, 2020), but even at that highly patched-up stage it left the question feasible or not open. However, at current rare earth prices anything may be feasible and chairman Charles Lew may not want to miss the boom.

//Politics

Biden signs executive order aimed at securing critical US supply chains

President Joe Biden signed a new executive order Wednesday mandating a 100-day review of critical product supply chains in the U.S., focused on those for computer chips, large capacity batteries, active pharmaceutical ingredients and critical minerals and strategic materials, including rare-earth minerals.

"The bottom line is simple: The American people should never face shortages in the goods and services they rely on, whether that's their car or their prescription medicines or the food at the local grocery store," Biden said in remarks prior to signing the order.

European Commission Chief Warns Against Over-reliance On China For Rare Earth Elements

European Commission President Ursula von der Leyen, on February 23, said that the European Union (EU) must end it’s over-reliance on imports from abroad to drive its technological development. Highlighting China’s monopoly in providing rare earth elements, she said that it was not “sustainable”. Her remarks came days after US President Joe Biden pointed out at Beijing’s rising infrastructure development urging Congress to “step up”.

Comment: Since 10 years the EU Commission has known what will come towards them. Meanwhile they spent EUR400 mio on debating clubs and all kinds of experiments, that only work if fired with disproportionate amounts of subsidies. Achievement close to nothing, but a number of consultants got rich in the process.

China's Latest Carbon Plan Would Top Even President Xi's Targets

The targets, which would require wind, solar and biomass to deliver 25.9% of national power sales or consumption in 2030, are more ambitious than President Xi’s last public pronouncement on the subject two months ago; and they set much longer-term guidance than has been typical for the industry.

It means some 1,580 gigawatts of cumulative capacity will be needed to meet the target, a third higher than Xi’s pledge, BNEF said.

Comment: To be taken with a grain of salt, or better a shovel of salt. If you want to know, what plan fullfilment looks like in today’s China, read this piece about the victory over poverty in China.

//Science

W7Energy rebrands to Versogen with eyes on future

The production of “green hydrogen,” or hydrogen produced without a carbon dioxide byproduct using renewable energy sources like wind and solar, is still in its infancy. According to the International Energy Agency, less than 1% of hydrogen produced today qualifies.

The science behind green hydrogen production, done through a process called electrolysis that essentially uses electricity to split the two hydrogen atoms from the oxygen atom in water, is still developing. The primary challenge is the ion-exchange membrane, a semi-permeable material that allows the separation of hydrogen and oxygen to occur. Companies around the world have been working to perfect a cost-efficient membrane that can be mass produced.

Yushan Yan, the Henry B. du Pont chair in chemical and biomolecular engineering at the University of Delaware, founded W7Energy in 2018 after working for more than 20 years on the development of fuel cell technology.

“Without this membrane, nobody can do anything,” he explained. “You can dream all you want, but you can’t get a device that will perform well or last for a long time.”

While competitors use platinum or iridium in their proton-exchange membranes, W7Enegy designed an anion-exchange membrane that uses nickel or silver. The result is a capital expense of less than half of their competitors, Yan explained.