Lynas license extended; Graphite restrictions not a China-only; Rare earth arrests in China + Vietnam; Pensana's dead parrot sketch; Aclara's "snow job"; China Northern Q3 output up >30%;
Rare Earth 25 October 2023
More arrests in China
China detains local staffer handling rare metals at Japan trader
A Japanese trading company's Chinese employee overseeing rare metals in China was taken into custody by Chinese authorities earlier this year, according to sources familiar with bilateral relations.
The reason for the person's detention in March is unknown. But with China tightening its control over rare metals, the person may be suspected of leaking information.
A Chinese employee of a Chinese state-owned nonferrous-metals company with reported business ties with the trading house is also believed to have been taken into custody at the time. Both were said to be in charge of trading in rare metals.
In March, these simultaneous arrests took place in Beijing and Shanghai. China considers rare metals, crucial for electric vehicle (EV) motors, as a strategic resource and is strengthening national control to safeguard economic security. It seems that detaining individuals and exerting pressure on companies aims to tightly regulate and control any related information.
In March, when the two were arrested, a Japanese executive at Astellas Pharma 's local subsidiary was also arrested in Beijing on charges including violating anti-espionage laws. China’s revised anti-espionage law was passed in April and went into effect in July.
Vietnam arrests rare earth industry officials, casting shadow over plans to rival China
Police in Vietnam have arrested six people accused of violating mining regulations, including the chairman of a company at the forefront of a drive to create a rare earth industry that could challenge China's dominance of the sector.
VTRE's chairman, Luu Anh Tuan, was accused of forging value added tax receipts in trading rare earths with Thai Duong Group, which operates a mine in the northern Vietnamese province of Yen Bai, the Ministry of Public Security said on Friday.
The chairman of Thai Duong Group, Doan Van Huan, was also arrested, accused of making 632 billion dong ($25.80 million) from illegal sales of ore extracted from the mine his company operated in Yen Bai province.
Police temporarily seized 13,715 tons of rare earths ores in a raid on Thai Duong's premises, the ministry statement said.
The government statement did not clarify what made the sales illegal, but a person with direct knowledge of the matter said that the Yen Bai mine raw ores had been exported to China, as the domestic refining costs for those ores were unprofitable.
At the beginning of the year there was a purge of hundreds of officials in Vietnam. Has this changed the modus operandi?
On 9 October 2023, Vietnam’s Ministry of Public Security's searched 21 rare earth mines and other locations in four provinces and cities, including Yen Bai province, as well as the homes of people involved. They discovered 13,715 tons of rare earths of unknown origin and more than 1,400 tons of iron ore. They determined that two persons named Huang and Chin were involved in illegal mining. The two men managed the mining and processing of 11,233 tons of rare earths and 152,856 tons of iron ore. They may have gained VND 632 billion (US$25 mio) from this activity and were arrested.
On 20 October 2023, 6 people were arrested :
Thai Duong Group's president and accounting officer Doan Van Huan
Thai Duong Group's Vice President Nguyen Van Chinh
Vietnam Rare Earths (VTRE) chairman Luu Anh Tuan
Vietnam Rare Earths (VTRE) accounting officer Nguyen Thi Hien
Hop Thanh Phat Transportation Trading president Dang Tran Chi
Hop Thanh Phat Transportation Trading accounting officer Pham Thi Ha
If we assume that export was part of this scheme (in case of VAT fraud it often is) Vietnam’s total exports of rare earth raw materials to China were US$81 mio in 2022, iron ore exports to China were US$533,381. Above mentioned US$25.8 mio are 32% of the total export value, not a petty offense.
Vietnam Rare Earths and Hop Thanh Phat Transportation Trading also under-invoiced Thai Duong for rare earth and iron ore. Consequently, the computed output VAT was too low, resulting in US$300,000 lost taxes for the government.
Private enterprise in a socialist environment always requires a certain level of brinkmanship paired with optimism.
Also forward-looking expansion of capacity and technological improvements in order to be everything to everyone may collide with the basic need of keeping an enterprise financially afloat.
VTRE’s investors may need a chairman.
Malaysia to allow exports of processed rare earths, ban raw material shipments
Malaysia will allow exports of only processed rare earths and prohibit shipments of rare earth raw material, its Science and Technology Minister Chang Lih Kang said on Tuesday.
Chang did not say when the new rules will come into effect.
In September, Malaysia said it will develop a policy to ban exports of rare earth raw materials to avoid exploitation and loss of resources.
Malaysia is home to just a fraction of the world's rare earth reserves, with an estimated 30 000 metric tons, data from the United States Geological Survey in 2019 showed. China is the biggest source with an estimated 44-million tons of reserves.
Same as in the case of Laos, the rare earth resource assessments of USGS for Malaysia are definitely not up to date.
China likes to stick to its own numbers for everything and anything, but in terms of rare earth resources it keeps referring to USGS’s numbers for validation. We have been arguing for years that we think there seems something wrong with the China rare earth resource numbers.
Not that it would matter in terms of rare earth supplies for the first half of this century, but all perspectives would change, were China’s rare earth resources substantially lower than the unchanged numbers that USGS has been publishing for years. Even Chinese experts have been calling for a re-assessment of China’s rare earth resources.
Why the Washington announcement won’t offer much immediate comfort to a sector looking for concerted domestic government action and assistance to accelWhy promoting critical minerals is the new cult in geopolitics and the resources industry
Anthony Albanese’s announcement of another $2 billion worth of cheap government loans and guarantees for critical minerals is designed to demonstrate the extent of Labor’s ambitions in clean energy and green manufacturing.
The government has loaned Iluka Resources money to build a rare earths processing centre at Eneabba in WA.“Australians will benefit through this investment in critical minerals, through technology, skills, jobs and economic gains,” he said in Washington.
The [US] government is banking on Australia getting ready access to US investment dollars and involvement in US supply chains turbo-charged by the massive subsidies available under the Biden administration’s Inflation Reduction Act.
In a demonstration of Western countries’ vulnerabilities, China has just announced curbs on exports of graphite, a critical mineral used in the production of electric vehicle batteries. This follows China’s earlier restrictions on gallium and germanium which are critical to high-grade microchips.
Scroll down for more in-depth on graphite and its place on international non-proliferation agreements.
The 19th International Rare Earth Conference
More than 230 rare earthlings got together 18-20 October in San Antonio to parade future achievements, exchange opinions and cut deals.
No surprises
Presentations ranged from steamrolling the rare earth space like an Abrams battle tank would, via peddling refined snake oil and light entertainment, to a chosen few displays of down-to-earth professionalism and thorough competence.
While many efforts are applaudable, North America starts construction of the sky-scraper on the 4th floor and the 13th floor, but kind of loses sight of the foundations. Current raw material supply concepts are still patchy, while nascent US-based permanent magnet capacities are dwarfed by growing imports.
Existing tangible solutions still base substantially on uninterrupted supplies from you-know-where, while advanced stage processing solutions move away from rare earth ores to semi-processed raw materials, possibly creating new dependencies.
No presentation from China
Was the lack of any presentation by Chinese attendees influenced by the current political atmosphere in China and the emphasis placed by leading Chinese publications on rare earth as a matter of national security?
Having a rare earth conference without a single presentation from any of those who really matter upstream to downstream in rare earths, China and Japan, or at least a presentation discussing these two in earnest, could be considered a fail.
China’s state-controlled Shenghe Resources attended the conference with their big guns. They are clearly looking for yet another rare earth project to invest in, in view of China’s increasing hunger for rare earth raw materials (see China Northern later in this piece).
No more disclosures from China
The rare earth data blackout introduced by China’s Ministry of Industry & Information Technology since last year has an impact. Figures presented at the conference could be off by approximately 20%, in our view.
In general it is not helpful if analysts present data on yawning gaps of supply and demand, if one does not mention where these gaps occur, geographically speaking: in China.
US-dominated event
This is the breakdown of the more than 230 participants in the conference:
Doubling down
To profit from increasing US participation, Metal Events plan next year’s conference in Washington DC, leaving the field in Asia and Australia to Resource Connect Asia and 121Mining.
Few rare earth visitors to China
A participant from China mentioned that foreign visitors to his company have become increasingly uncommon.
Generally foreigner arrivals in China in 2023 have plummeted to a fraction of pre-COVID levels.
The arrests of a foreign businessman on undisclosed espionage charges as well as the arrests of Chinese nationals working in rare metals in China, one of them for a Japanese company, increase a perceived high personal risk of foreign rare earthlings wanting to travel to China.
So a drop in foreign visitor numbers to rare earth enterprises in China is not really a surprise.
Also Chinese business trips abroad have become subject to scrutiny and restrictions from China’s government. Quite possibly Chinese rare earth key executives may be compelled to travel with minders in future, with pre- and post-trip briefings, just like they did in the 1980s.
Who Killed the Chinese Economy?
Zongyuan Zoe Liu says:
Xi is not to blame for the Chinese economy’s deepest structural problems. He is, however, responsible for the government’s failure to deal with them.
Adam S. Posen says:
Zongyuan Zoe Liu and Michael Pettis go doggedly narrow; they neglect the importance of Xi’s behavior in shaping outcomes and even seem to deny that the economic regime has changed.
The write-up and Posen’s response providing insights on the events leading up to the current situation is exceptionally well-written and highly informative. We strongly agree with Posen's analysis, as it becomes abundantly clear when examining the details outlined in Document No. 9 of April 2013, along with the subsequent Decision of the 3rd Plenum of the 18th Central Committee, that China, under Xi's leadership, initiated a deliberate process of decoupling from Western nations. This decision also involved a reversal of critical economic reforms, driven by ideological factors.
Back in 2013-2014, we found ourselves perplexed, as these developments took us by surprise. No one was adequately prepared for the profound changes that unfolded, which inevitably led to the resurgence of challenges that a previous government had spent a decade addressing.
Question: How many socialists does it take to change a lightbulb?
Answer: We are not going to change it, we think it works.
John Cleese
India
Royalty rates fixed at 3 per cent for lithium, 1 per cent for rare earth elements
The Centre on Wednesday said it has approved royalty rates of 3 per cent each for lithium and niobium and 1 per cent for rare earth elements (REEs).
The approval by the cabinet will enable the Centre to auction lithium, niobium and REE blocks for the first time in the country, it said.
Further, the method for calculating the average sale price (ASP) of these minerals has also been prepared by the Centre which will allow determining of bid parameters.
The Centre is working to launch the first round of the auction of critical and strategic minerals such as lithium, REE, nickel, platinum group of elements, potash, glauconite, phosphorite, graphite and molybdenum shortly.
Will foreign explorers be permitted to bid?
Estonia
Anvar Samost: Foreign investments are no longer coming to Estonia
The Minister of Economics has long been presenting the magnet plant being built in Ida-Viru County as an example of investment in Estonia. To receive this investment of 100 million euros, the Estonian state had to pay 20 million euros in benefits. We are not talking about a new investor in the literal sense of the word, because the plant is being built by the parent company of the Silmet enterprise, Neo Performance Materials, which has extensive experience in operating in Estonia.
Firstly, security risks in Estonia have increased greatly since Russia launched a full-scale war of conquest against Ukraine. It's impossible to do anything quickly about this. We are a border state for the Western world, next to which lies an unpredictable evil empire.
The second reason concerns mainly industrial enterprises, as well as, for example, large data centers. Due to erroneous energy policy decisions made over a long period of time, the price of electricity in Estonia has been several times higher for two years now than in its neighbors in Finland and Sweden.
The third and biggest misfortune in the case of foreign investment is that Estonian officials and politicians no longer want anyone to build anything. The example of the Tartu pulp mill is already beginning to be forgotten, but it still acts as a warning.
The latter are not only Estonian problems. Welcome to the EU!
Nikkei and Reuters
China to curb exports of key EV battery material from Dec. 1
Regulations will be introduced based on the Export Control Law and others that tighten export controls on strategic goods, preventing Chinese companies from exporting unless they go through the authority's examination process and obtain permission.
Chinese companies are believed to hold over 80% of market share in negatively charged materials for automotive batteries, in which high-purity graphite is essential.
According to sources, Chinese companies have temporarily stopped supplying the company [Northvolt, Sweden] and its business partners or have shown reluctance to expand supply. Northvolt works with Volkswagen (VW) and other companies, and Western companies have become increasingly wary of the battery maker's dependence on China.
Misconceptions
We find several things wrong with this article, whether at Nikkei or at Thomson Reuters:
There is a pre-existing China export control list for graphite products dating 2006;
Simultaneously with the new licensing requirements, export restrictions for other graphite items dating 2006 were canceled, such as graphite electrodes for electric arc furnaces (for the EU’s “green steel” and melting metal scrap for recycling. Both under large carbon output, by the way);
Both, Nikkei and Reuters, obviously knew it, but chose not go into it;
For if they had looked at it in order to elaborate, the media would have realised that graphite is featured international agreements:
Nuclear Non-Proliferation Treaty (NPT), China is signatory (1992);
Nuclear Suppliers Group (NSG), China is not a member, but adheres to the group’s guidelines since 1992;
Missile Technology Control Regime (MTCR), which is an informal arrangement. However, China pledged in 1992 to observe the guidelines.
Graphite on the US Department of Commerce Export Control List
If the media had wanted to they would have found, that graphite products are on US Department of Commerce’s export control list because there is “dual use” (civilian and military) potential:
Japan’s Export Controls
Graphite is also featured in Japan’s export controls, as the media could have quickly found, had they looked into it.
Wassenar Arrangement
Also the EU’s dual use products “Wassenar Arrangement” mentions some use of graphite as a composite.
But, as ever, the devil lives in the detail
Car = car, therefore Hummer = Toyota Prius? Rare earth = rare earth, therefore lanthanum = terbium?
Yes, you got it, graphite ≠ graphite:
For the most part, international export controls apply to high purity, even-molecular-structure synthetic graphite;
No, synthetic and natural graphite are not the same. As the name already may signal, you don’t dig out synthetic graphite from a mine;
You can’t use mined graphite dust for batteries. In terms of batteries we are talking about spherical graphite and synthetic graphite;
Spherical graphite is made from graphite flakes, which are not ubiquitous. The larger the flakes, the better;
For the purpose of manufacturing spherical graphite China imports graphite flakes.
The full text of the China regulation
With the a.m. in mind, since we like seeking truth from fact, please find here the actual full announcement from MOFCOM , where we added the [product descriptions] to the otherwise unintelligible HS-codes:
Announcement of the Ministry of Commerce and the General Administration of Customs on Optimizing and Adjusting Temporary Export Control Measures for Graphite Items
In accordance with the relevant provisions of the Export Control Law of the People's Republic of China, the Foreign Trade Law of the People's Republic of China, and the Customs Law of the People's Republic of China, in order to safeguard national security and interests, and with the approval of the State Council, it was decided to impose restrictions on the Ministry of Commerce, the State Commission of Science, Technology and Industry for National Defense, and the Customs scope of items listed in the General Administration Announcement No. 50 of 2006 (" Decision to Implement Temporary Export Control Measures on Graphite Related Products") has been optimised and adjusted , and export controls have been implemented on some items . The relevant matters are announced as follows:
1. Items that meet the following characteristics may not be exported without permission :
(1) High-purity (purity >99.9%) , high-strength (flexural strength >30Mpa ), high-density (density >1.73g / cubic centimeter) artificial graphite materials and their products (refer to customs commodity numbers: 3801100030 [=artificial graphite in powder form for nuclear and missile application], 3801909010 [=other preparations based on graphite or other carbon (in the form of pastes, blocks, plates ) or other semi-manufactures], 6815190020 [=graphite accessories for silicon carbide epitaxial production equipment]).
(2) Natural flake graphite and its products (including spheroidized graphite, expanded graphite, etc.) (refer to customs commodity numbers: 2504101000 [=natural graphite, in flakes] , 2504109100 [=spheroidized graphite] , 3801901000 =[spheroidised graphite by surface treatment] , 3801909010 [Other preparations based on graphite or other carbon (in the form of pastes, blocks, plates ) or other semi-manufactures], 3824999940 [=expanded graphite], 6815190020 [=Graphite accessories for silicon carbide epitaxial production equipment]).
2. In addition to the above items, other items in the Announcement No. 50 of 2006 ( " Decision to Implement Temporary Export Control Measures on Graphite Related Products " ) issued by the Ministry of Commerce, the State Commission of Science, Technology and Industry for National Defense, and the General Administration of Customs have been canceled from temporary export controls.
3. Export operators should handle export licensing procedures in accordance with relevant regulations, apply to the Ministry of Commerce through the provincial commerce department, fill in the dual-use items and technology export application form and submit the following documents:
(1) The original of the export contract or agreement or a copy or scanned copy that is consistent with the original;
(2) Technical description or test report of the items to be exported;
(3) End user and end use certification;
(4) Introduction to importers and end users;
(5) Identity certificates of the applicant’s legal representative, main business manager and person in charge.
4. The Ministry of Commerce shall conduct an examination from the date of receipt of the export application documents, or shall conduct an examination in conjunction with relevant departments, and make a decision to approve or disapprove within the statutory time limit.
The export of items listed in this announcement which have a significant impact on national security shall be submitted to the State Council for approval by the Ministry of Commerce in conjunction with relevant departments.
5. If the license is approved after review, the Ministry of Commerce will issue an export license for dual-use items and technologies (hereinafter referred to as the export license).
6. Export license application and issuance procedures, handling of special circumstances, document retention period, etc. are in accordance with the Ministry of Commerce and the General Administration of Customs Order No. 29 of 2005 ( " Measures for the Administration of Import and Export Licenses for Dual - Use Items and Technologies") The relevant regulations are implemented.
7. Export operators shall issue export licenses to the customs, handle customs procedures in accordance with the provisions of the Customs Law of the People's Republic of China, and accept customs supervision. The customs will handle the inspection and release procedures based on the export license issued by the Ministry of Commerce.
8. If an export operator exports without permission, exports beyond the scope of permission, or commits other illegal acts, the Ministry of Commerce or Customs and other departments will impose administrative penalties in accordance with relevant laws and regulations. Constitute a crime, be held criminally responsible.
9. This announcement will be officially implemented from December 1 , 2023. The Ministry of Commerce , the State Commission of Science, Technology and Industry for National Defense, and the General Administration of Customs Announcement No. 50 of 2006 ( " Decision to Implement Temporary Export Control Measures on Graphite Related Products " ) will be abolished at the same time . .
Ministry of Commerce and General Administration of Customs
October 20 , 2023
Dual use
On the day of publication China’s Ministry of Commerce answered questions of the press and clarified that this was an update of China’s dual use (=civilian and military) products control list.
Somehow we are rather tempted to think the mention of dual use might have been an aspect to look at for the journalists of the Nikkei and Thomson Reuters.
They chose not to.
Unnecessary products added to the list?
China adds more graphite products than others have on their export control lists and China adds the battery-relevant spheroidised/spherical graphite.
And this is, what the media selectively chose to go about.
Our take
Strictly speaking, a lot of materials can be dual use, also spherical graphite in military-use batteries. However, if you torture gummi-bears long enough, even they will confess to being dual-use products.
No matter if or not China’s government tries to send cryptic blackmail letters via regulation, the quality of reporting at Nikkei and at Reuters is not satisfactory.
Tit for tat?
U.S. tells Nvidia to halt shipping some AI chips to China immediately
The U.S. government has told Nvidia it must stop shipping some of its high-end artificial intelligence chips to China without licenses immediately, a company filing Tuesday shows.
In effect, Nvidia must halt shipping A800 and H800 chips to China without licenses from the U.S. These were two alternatives the company offered to the China market for its A100 and H100 AI processors after the U.S. imposed the original AI chip export restrictions in October 2022.
In addition to the A800, H800 and the already banned A100 and H100, the move also affects the L40S, a new graphic processing unit designed for generative AI that was launched by Nvidia in August, according to the company filing dated Tuesday.
China may not necessarily view this as a confidence-building measure.
China weighs options to blunt U.S. sanctions in a Taiwan conflict
In assessing Russia's experience, many of the researchers warn that China's much larger economy and dependence on advanced foreign technology and commodity imports mean a sanctions fight with the West could be far more destructive. Some doubled down on the view that increasing interdependence could be a better approach than pulling up the shutters.
"The risk that China's overseas reserve assets may be frozen seems more imminent," wrote Wang Yongli, general manager of China International Futures, one of the country's largest commodities and financial futures brokerage businesses.
Wang and several PBOC researchers wrote in articles that if the U.S. implemented Russia-style sanctions on China, Beijing should freeze U.S. investment and pension funds and seize the assets of U.S. companies. The papers did not name individual companies as potential targets.
Sun Xiaotao, a CCIEE researcher, published an article in February that argues China should push for more gold-denominated trade to prevent major fluctuations of the yuan - echoing the Russian central bank's decision to increase its gold reserves by one million ounces since the Ukraine war began.
This is getting more and more nasty.
Malaysia rare earth
Perak garners over RM22bil investments
“MB Incorporated Perak has also explored potential collaboration with [China] Rare Earth Group Co Ltd, which is based in Nanning, for the latest technology in isolating rare-earth elements and the rehabilitation process or conservation of the industrial site,” he said.
Good luck with that, as related technology has been restricted and banned for export or licensing from China for more than 20 years.
MB Incorporated Perak are one of the state owned companies who leased land for mining to ion adsorption clay miners.
If China Rare Earth Group were to assist Perak state with special approval from China’s State Council, then it would come at a hefty political price. Because China only wants the raw material, it does not want to further rare earth processing outside of China’s jurisdiction.
Related:
MB denies PAS’s claims Perak has violated ban on export of rare earths
“He (Tuan Ibrahim) should know that the NR-REE [non-radioactive rare earths] pilot project started on 87.4ha in Kenering, Hulu Perak, after legal approval was obtained from the relevant technical agencies and state authorities,” he said, according to Bernama.
“As a pilot project, if we want to know the market value of NR-REE, we need to export it because our country does not have a factory to process it.”
Saarani said Perak had been selling the NR-REE since January, before the export ban was issued in September.
“We asked to be given an exemption to export and sell NR-REE until the ministry makes a decision on regulations for everything related to NR-REE throughout the country.
“We will continue to export until there are regulations that prohibit us from selling.
Mudslinging.
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