Hitachi Metals Sold; Lynas' PDF Rejected; More Myanmar; Rainbows Gypsum; RE Prices And Fundamentals Out Of Tune;

2021 Rare Earths May 2

May 2, 2021

Why are you picking on Pensana?

We don’t. Using significant amounts of time and work we followed a couple of expert tip-offs received last year plus whistleblower information containing rather serious allegations which we won’t repeat here.

We are not crusaders, wasting everybody’s time with one single junior RE miner, who is inevitably headed for irrelevance.

After all we learned it is our opinion, whatever the problem in rare earth may be, Pensana will not be part of the solution. Subject closed.

Time for honourable mentions for companies who don’t get much real estate here and who work quietly, systematically and diligently towards their goals, without bothering the market with hyped and trivial announcements, among them:

We hear you, we see you.

A very important piece by Jack Lifton, who is the probably the most eminent and most prominent rare earth expert on the American continent:

The real “Critical” in the Critical Materials’ Supply Chain is — Vertical Integration.

In fact, there are Chinese companies with thousands of employees that are totally vertically integrated from the mine to the magnet, in the case of rare earths, and from cobalt production and processing to superalloy production. Mostly though these total supply chains are created from competition among scores of companies with the appropriate skills.

A little criticism must be allowed: In the 1980s westerners were admiring and studying Japanese management, which later turned out to be not remotely as great as anticipated.

Same with China. Not everything in China is what it seems to be, actually nothing is. Many things are much better than they appear to be, others are much worse than one could possibly imagine.

Murphy’s Law in all its variations has probably been consistently the No. 1 intangible export from the US to China.

If we could wish for something, it would be a Jack Lifton who is unrestrained optimistic.

Bain Capital strikes $7.5B deal for Hitachi Metals

A consortium led by Bain Capital has agreed to acquire Hitachi Metals for 817 billion yen (about $7.5 billion) in a deal that will take the company private. The move comes after Japanese conglomerate Hitachi Ltd. announced plans to divest some of its business segments, including Hitachi Chemical Company and Fujifilm. The metals unit manufactures a range of products, including wiring and cables.

It is not clear how much of Hitachi’s sales are directly related to permanent magnets, as magnetic materials go across several of its product lines. It may be reasonable to assume ~15%.

Generally, looking at Hitachi’s product range, there is not much that does not seem to compete with China’s exports.

The unaudited annual financial statement FY 2020 of Hitachi Metals is nothing short of catastrophic, losses across all business segments except wires and cables.

US$7.5 billion is roughly equivalent to one year of Hitachi Metals’ sales plus some goodwill.

It will be interesting to see, how Bain will turn this acquisition into a profit.

Rainbow posted Final Phalaborwa Assay Results Demonstrate Value of Rare Earths Basket, which refers to the millions of tons of phosphogypsum phosphate fertilizer production waste that contain rare earth elements.

The post contains this table of drilling results and the calculation of total rare earth oxide (TREO) contents:

Source: Rainbow Rare Earth Final Phalaborwa Assay Results Demonstrate Value of Rare Earths Basket

We tried and failed in validating the TREO content (outlined in red) by adding up the rare earth element contents in the rows on the left of “TREO” per Hole ID. We consistently arrive at a ~19.5% lower TREO value per row. So we assume there should be some adjustment factor we should know, but are unaware of.

Our Excel sheet with Rainbow data results in an overall average of 3,590 ppm or 0.359% TREO.

Full scores and a big thumbs-up for Rainbow’s disclosure of thorium and uranium contents, together ~51 ppm or 0.005% in average.

The proportional content of TREO and value (we apply rather generous recovery rates):

In terms of Nd, Pr, Dy and Tb the proportional composition is plainly beautiful, an added small bonus is the comparatively high content of good value gadolinium.

We should guess, that the Phalaborwa total quantity in terms of TREO could be around 120,000 t, so from a total quantity perspective it seems worthwhile.

In view of the so far unsuccessful attempts of others on the commercially meaningful extraction of REE from phosphogypsum elsewhere, it will be very interesting to learn what extraction method Rainbow will select and what the yields can be.

So far it looks promising.

No news on the Burundi rare earth export stop. According to several embassies in Burundi, land- and water borders of Burundi are currently closed because of COVID-19, except for transporting cargo within the East African Community. However, the country has plenty to deal with:

The a.m. is just a small selection of problems.

Prices trend softer across the board:

The stand-off continues with market leader China Northern stubbornly keeping NdPr price up, while magnet makers only buy hand-in-mouth and hope for lower prices:

The neodymium oxide price has almost given up all gains from Q1:

We think it is speculators trying to move inventory, piled up during the previous 2 quarters of feeding frenzy, who are a significant factor in keeping prices under pressure. That will not be a sustained condition.

Why would we think so?

Light rare earth praseodumium oxide as a singular product has a comparatively illiquid market, not interesting for traders and speculators, we dare say a classic manufacturer-to-user product. The praseodymium oxide price keeps firming, which points at a generally undersupplied RE market:

This is similar for heavy rare earth gadolinium oxide, which also remains rather firm:

We do not envision a sustained market glut, such as others predict.

We are of the opinion, once speculators’ inventory has been absorbed by the market, we may see prices firming again on still unbalanced supply-demand fundamentals.

“When?” is anybody’s guess.

There is more to the rare earth market than meets the eye, careful with stereotypes. For example, Solvays’ Liyang Solvay Rare Earth New Materials Co., Ltd. export yttrium to Japan and Neo Performance Materials ship neodymium from Estonia to Tianjin, China. Go figure.

Thanks for reading, have a wonderful first week of May!

//Companies

Malaysia: Lynas’ plan for permanent radioactive waste dump rejected

Lynas rushed to the media with a claim that this was just a minor delay, based on a technicality, which will be fixed with the submission of new documents.
The company said: “Lynas is working together with the relevant Malaysian Federal and Pahang State governments to provide the information requested by the DOE [Department Of Environment]. Because the initial 12 week period has expired, the DOE has stated on its website that the EIA is rejected. Once the information is provided, Lynas has been advised by the DOE that the assessment of the EIA will resume.”
Earlier this year, Tan explained in an interview with GL that Lynas was seeking to “carve out one of the last remnants of a pristine rainforest for a shallow radioactive waste dump, lined with only a 2 millimetre-thin, high-density polyethylene (HDPE) plastic sheet”.

Comment: Other voices in Malaysia ask the government to admit “Condisoil” from Lynas to the fertilizer market to save money spent on phosphate fertiliser imports. The HDPE film in the PDF is more likely to spoil the environment than Lynas’ probably entirely benign waste product is. One can literally visualize someone in the background pulling strings. But it was Lynas former managment who started the mess by promising, what was impossible from the beginning.

Altona Rare Earths Plc - Decision to Proceed with Acquisition

Altona, a rare earths exploration and mining company, announces that following the announcement of the Memorandum of Understanding (“MoU”) on 24 March 2021, between the Company and Ussokoti Investimentos Limitada (“Ussokoti”), the board of Altona is pleased to state that the due diligence on the acquisition target and Prospecting License 7573L (Monte Muambe Rare Earths Project), has been satisfactorily completed and that the Company has now informed Ussokoti that it wishes to proceed with the project.

Comment: Ionic Rare Earth share price took a ~20% breather last week.

//Myanmar

Illegal Rare Earth Mines on China Border Multiply Since Myanmar’s Coup

By the way ot Leading Edge Materials Corp. and REIA

“Before the coup, we only saw one or two trucks per day. Now there is no proper inspection we are seeing 10 to 15,” an activist in Chipwi told The Irrawaddy.
He said the trucks are loaded with ammonium sulphate fertilizer bags filled at illegal mines [This is an error. Ammonium sulphate is needed at the mines, not shipped from the mines]
According to the Kachin State Mining Department, only the union administration can give permission for rare earth mining in Pangwa and Chipwi. The department said it found several illegal mines and Chinese workers in 2019 and 2020 after a series of inspections. The department has said the involvement of armed groups [Kachin Independence Army, Shanni Nationalities Army] makes regulating the industry challenging.
The group said more than 20 villages were suffering from polluted soil and water from rare earth mining. In 2020 and 2019, the Chipwe river twice turned red due to mining waste, according to environmental groups.

Comment: Allegedly China is arming militia in Myanmar, we had a look at northern Myanmar militias, mentioned as “armed groups” in above article. We checked the guns on a couple of photos:

Source: Myanmar Times (whose publication has been suspended), Paul Vrieze , Voice of America via Wikipedia and wikia.org. We of course used full-sized images to painstakingly establish the models and make.

Different from the Type 81, the QZB-03 has reportedly never been introduced to the PLA in China, it is export only through China North Industries Corp “Norinco”. Millions of AK47 were produced, not only in Izhevsk, but also outside Russia. China’s version of AK47 named AK56 and its successors models look distinctly different from the a.m. original AK47 design. While there are enough arms traders who peddle such run-of-the-house guns to everyone and sundry, it can’t be excluded that guns and consumables like spares and ammunition may find their way directly to certain groups in Myanmar.

Investment of 300 million! Rare earth metal mining project settled in Yingjiang
Recently, Minmetals Rare Earth Group (Tengchong) Mining Co., Ltd. and Yingjiang County held a video signing ceremony for the project framework agreement to cooperate on the "Yingjiang Rare Rare Earth Metal Mineral Exploration, Development and Trade Project" (referred to as the "Rare Earth Metal Mining Project") A consensus was reached that the company plans to invest 300 million yuan in this project.
According to the performance forecast issued by Minmetals Rare Earth, the company's operating performance in the first quarter will also increase significantly, that is, the net profit from January to March will be between 96 million and 106 million yuan, a year-on-year increase of 702.64%-786.3%. The main reason for the growth in performance was that the prices of some rare earth products have risen sharply this year, and the company has actively grasped the trend of market changes. The gross profit margin and overall profitability of sales have risen sharply compared with the same period last year. In 2020, the company also achieved good results, with a net profit of 279 million yuan, an increase of 224.8% from the 86 million yuan in 2019.
It is worth mentioning that there are relatively many long-term orders from domestic rare-earth companies.

Comment: Minmetals Rare Earth Group (Tengchong) Mining Co., Ltd. is located at the customs clearance point of RE imports from Myanmar, Tengchong. And here is Yingjiang:

//Politics

‘We need to move from debate to dialogue over whether to mine the deep sea for minerals’

The recent announcement by seabed mining contractor DeepGreen that it plans to become the first company to extract cobalt, copper, nickel and rare earth minerals from the deep seabed in commercial quantities by 2024 has attracted a lot of media attention and vigorous debate.
The World Bank predicts that the production of some of these minerals will need to increase by 500% by 2050 to meet demand, as they are critical to manufacturing the building blocks of the future economy: rechargeable batteries and motors for electric vehicles, wind turbines, household appliances and mobile devices.
But just how sustainable deep-sea mining in commercial quantities would be if the proposal gets the go-ahead from the International Seabed Authority is a complex and controversial question to answer. Decisions taken now could have lasting impacts – positive and negative – for generations to come.

DOE awards $19mn to fund 13 rare earth projects

Among the entities selected to receive the DOE funding to develop their respective projects include Pennsylvania State University, Virginia Polytechnic Institute and State University, Collaborative Composite Solutions, and New Mexico Institute of Mining and Technology.
The DOE's Office of Fossil Energy's National Energy Technology Laboratory (NETL) will manage the selected projects, the report said.

//Recycling

BESPOKE BATTERY RECYCLING

A proprietary hydrometallurgical process known as Re-2Ox —originally conceived for the production of high-grade cobalt sulfate from mineral resources — is now showing promise in the field of battery recycling. “We did some preliminary test work and the technology was amenable to batteries. The intent is to process not just primary feed, but also secondary feed, which is all the different battery products, including lithium ion, nickel cadmium and nickel hydride. We take all these secondary feeds and break down the batteries into usable materials,” explains Frank Basa, CEO of Canada Silver Cobalt Works Inc. (Coquitlam, B.C., Canada; www.canadasilvercobaltworks.com).

'Hiring scientists wasn't on my roadmap': Andy Gomarsall on N2S expansion as he joins CRN Tech Impact judging panel

Using bioleaching techniques, N2S is breeding bacteria to extract gold and other rare metals from printed circuit boards, which Gomarsall said make up to 70 to 90 per cent of the embodied carbon in technology. CRN visited its facility last Spring.
Having recently taken on two new investors, Gomarsall said N2S is close to reaching its goal of proving the technique end to end.
"We need more scientists, which is exciting," he said.