Mkango Comment; DNI & Sinosteel; Vital Go Heavy; Junior Juniors Hop On Train; Afghan RE Myth; India Explores Arunachal For RE; Healthy Prices
Rare Earth 2021 August 19
This post was not sent out yesterday, as substack.com encountered an unexplained server issue. Our apologies for that.
To err is human. For the really big mess-ups you need a computer.
In our last issue we wrote about Mkango and they got in touch to advise on the contents:
Noble/Talaxis no longer has any offtake rights.
Mkango will export a high value, purified mixed rare earth carbonate from malawi not a low value mineral concentrate. We have a couple of options from Malawi, both Beira and Nacala ports, most likely the latter along the new railway line. We’ve used this already to bring in drill rigs and export the bulk sample and had no problems at all.
We stand corrected and learn: Thy shall’t not read longish press releases at 3 a.m. in the morning.
Defense Metals Corp. is pleased to announce the execution of a non-binding Memorandum of Understanding (“MOU”) with Sinosteel Equipment & Engineering Co., Ltd, a subsidiary of Sinosteel Corporation, consisting of information sharing, beneficiation testwork and potential concentrator design research cooperation, and an investigation into the establishment of an on-site large-scale pilot plant at the Wicheeda Rare Earth Property (“Wicheeda”) to assess the economic and technical feasibility of full-scale mine development.
Sinosteel MECC will share with DEFN its experience in the rare earths industry relating to beneficiation, Engineering Procurement Construction (“EPC”) and EPC financing, and other general knowledge including pricing, costs, and other relevant matters in the rare earth elements industry.
Sinosteel makes sense in terms of a low cost EPC, especially if powerful China finance is attached. Northern Minerals signed up with Sinosteel before and meanwhile repaid half of their debt to Sinosteel during 2020. Interesting to see, that Sinosteel use control systems of Honeywell.
Sinosteel’s history you find here. Same as other central, system-relevant, state-owned enterprises like Minmetals, China Nonferrous, Sinochem, Sinopec, PetroChina, China Railway, Baowu Steel, COSCO, Sinotrans and so on, Sinosteel are administered by the State-owned Assets Supervision and Administration Commission (SASAC) under direct control of China’s State Council.
Profile of Wicheeda, proportional content of TREO, according to the NI43-101 and company presentations:
Defense metals expect to produce a concentrate of >48%.
The very high proportion of lanthanum and cerium is not really exciting currently, as new mass applications for both need to be found.
However, Chinese buyers may still be interested in this concentrate.
Vital to acquire Quebec Precious Metals Corporation’s 68% interest in Kipawa and 100% of Zeus heavy rare earth projects in Quebec, Canada, for C$8 million staged over 5 years
Kipawa is a heavy rare earths project, located 50km from Temiscaming in Quebec, with a Mineral Resource Estimate of 15.5Mt of eudialyte at 0.434% TREO and 0.873 ZrO2, 6.3Mt of mosandrite at 0.391% TREO, 1.018% ZrO2, 5.1Mt of britholite at 0.286% TREO, 0.944% ZrO2, and with a Proven and Probable Reserve Estimate of 19.8Mt at 0.411% TREO.
We are a bit confused, as the NI43-101 of September 4, 2013, says:
How can 100%-owned Zeus can contain a 68% share of something else? The press release goes on:
Twelve heavy rare earth showings have been identified on the Zeus project, some of which contain niobium and tantalum.
What is so different in a “heavy rare earth” deposit?
To put it really banal and very simple [experts cringe now!]: Different from the high proportion of lanthanum and cerium (>70%) in light rare earth, in a heavy rare earth deposit the proportion of yttrium can be very high, 20-40% of TREO. What really matters is, that a heavy rare earth deposit has a proportionally higher content of desireables like dysprosium, terbium, gaolinium and holmium.
The proportion to TREO contents of Kipawa according to the NI43-101 looks like this:
The TREO of Kipawa rests in eudialyte. Vital’s Nechalacho is described as “pseudomorphs” of eudialyte.
Source: “Eudialyte – The Aachen Way” by Prof. Dr.-Ing. Dr. h.c. B. Friedrich, Nov 11, 2015 (we don’t think, this map is entirely correct)
For comparison Sweden’s Norra Kärr eudialyte (owned by Leading Edge Materials Corp):
Kipawa was originally developed by a Matamec Explorations Inc. For a quick and easy understanding of Kipawa, please click for Matamec’s presentation here:
In 2012 Matamec had formed a joint venture with Japan’s Toyota Tsusho (“Toyotsu”), a Japanese Sogo Shosha, in order to exploit Nipawa. This JV was terminated in 2014.
One of our contributing experts believes, Toyotsu may have pulled because of lack of know-how to process eudialyte.
We don’t think so.
We tried to understand the Toyotsu rare earth story a bit better and traced back the company activities until 2006.
From 1990 to 2005 China’s rare earth exports had increased ten-fold, 60-70% rare earth output was exported. However, during the same period average rare earth prices had fallen more then 60%. So China started doing something about it. From mid of 2005 to mid 2006, previously lacklustre neodymium oxide prices rose by ca. 15% and did not fall back, causing alarm in Japan.
Subsequently, Toyotsu established a rare earth subsidiary in India during 2009. In 2010, before the ‘Senkaku incident’, Japan and India signed an agreement on developing rare earth resources and in 2015 Toyotsu signed a long term agreement for buying a mixed rare earth chloride from India Rare Earth Ltd (IREL) for the purpose of processing and exporting 4,000 t per year of rare earth oxides.
The decision to invest in Matamec’s project was made in late 2011, during the boom period with sky-high RE prices, after China’s brief rare earth embargo against Japan (2010). The MOU between Matamec and Toyotsu was signed in December 2011, followed by the JV agreement in 2012.
Toyotsu’s objective was to organize new supply of dysprosium for Japan as fast as possible (Toyotsu annual report 2012, P. 23).
At about the same time Toyotsu signed up for the Orocobre lithium project Olaroz, with backing from JOGMEC:
JOGMEC and Toyotsu also engaged in an LNG project in Australia back in 2008.
However, we can find no evidence that JOGMEC were involved in the Kipawa project.
Following the ‘Senkaku incident’ and the resulting brief China rare earths embargo against Japan, rare earths prices had exploded and a myriad of rogue rare earth mining and rudimentary processing facilities had popped up in China (including outright theft from state-owned rare earth mines) in order to participate in the perceived boom, multiplying supply, sending prices into a multi-year, non-stop tailspin during 2011-2015.
We assume, that the reason for Toyotsu to pull out from Kipawa lies with the slow progress of the project and the then substantially changed market conditions.
A word about JOGMEC
JOGMEC (Japan Oil, Gas and Metals National Corporation) use the General Trading Houses (Sogo-Shosha 総合商社 such as Sumitomo Corp, Toyotsu, Marubeni, Itoho-chu, Sojitz, Mitsui & Co, Mistubishi Corp, etc) as trail-blazers and back them up with loan guarantees, technical know-how and co-investment in resource development.
Some people asssume, that JOGMEC’s activities in rare earths only started late 2010 in response to China’s rare earth embargo of Japan.
That is not correct.
JOGMEC was established in 2004 by the merger of JNOC Japan National Oil Corporation (original establishment 1967) and the MMAJ Metal Mining Agency of Japan (original establishment 1963). Both in charge of guaranteeing sufficient and cheap supplies of raw materials and oil and gas to Japan’s industries.
We can trace MMAJ’s efforts of sourcing ex-China rare earths for Japan back to 1993. And in their new incarnation as JOGMEC they were on deposits like Strange Lake and Thor Lake (where Nechalacho is) in Canada and resource developments elsewhere in South America, Central Asia and Africa, long before the rare earth crisis of 2010.
We could find, however, no evidence that MMAJ were invloved in the unmitigated disaster of Mitsubishi Chemical’s company “Asia Rare Earth Sdn Bhd” at Bukit Merah, Malaysia from 1979 to 2003 (if interested, download the timeline here).
And if you think ocean floor mining would be something new, MMAJ’s active research into this started back in 1987.
Eclipse Metals Ltd continues to assess historical diamond drill core from a key carbonatite deposit within its Ivittuut Project in Greenland.
The multi-element exploration company has identified 750 metres worth of drill core from the Gronnedal-lka carbonatite area that has not been systematically assayed for rare earth element (REE) mineralisation.
Earlier this year, the ASX-lister recorded as much as 34,400 parts per million (ppm) total rare earth elements (REE) from grab samples at the Gronnedal-lka deposit.
Another attempt at Greenland rare earth mining.
Among all the rare earth news, the Baotou Rare Earth Exchange chose to carry this article on Eclipse in Chinese language on their WeChat channel. Greenland seemingly remains of particular interest. Talking of particular interest, we would like to emphasize again, that securing your servers as well as encrypting e-mail and online communication is more than just advisable.
Apart from non-listed Tanbreez, the stocks of Greenland rare earth companies have not fared well this year:
The likelihood of permits, or rather lack thereof, dampens investor enthusiasm for rare earths from Greenland.
Another one trying to jump on to the train:
With market demand for rare earths at a high, ASX-listed Australian Bauxite is hoping to add some unexpected value to its project with the rare earth elements accumulations it has discovered.
Management believes that as the rare earths occur in clays and are soluble, the mineralisation is an “ionic adsorption clay deposit”, which is the major deposit type that produce low-cost rare earth production in southern China.
Low cost, yes, if you do in-situ leaching. If that is not an option, things get distinctly less “low cost”.
And juniors among the junior rare earth miners keep trying:
The first soil anomaly identified at the Killi-Kill prospect is a heavy rare earths element (HREE) anomaly located on the western end of the Mt Mansbridge inlier. It lies on the prospective unconformable contact between the basement Killi-Killi formation and the overlying Gardiner sandstone.
The second Killi-Killi anomaly is a light rare earths element (LREE) anomaly that was partially defined by previous soil sampling programs. Following the latest soil survey, the anomaly has now been defined at a length of 1km and is again located on the prospective unconformable contact.
Elsewhere within the Mt Mansbridge project, identified REE targets include: the Mansbridge xenotime-dysprosium occurrence previously identified during uranium exploration by BHP (ASX: BHP); the Kylo xenotime-dysprosium occurrence found through rock chip samples collected by Northern Minerals; the Vader geochemical anomaly; and radiometric anomalies T3, T11, T15, T16, T17 and T30.
While not as vast as some other Asian countries, the economic opportunities for China in Afghanistan are still sizable. For example, the country holds an estimated $1 trillion to $3 trillion worth of minerals. Some reports also indicate it houses one of the world’s largest deposits of rare earth elements, which are used to produce military weaponry, batteries, and other high-tech goods.
This non-sense of Afghan mineral resources keeps getting recycled over and over and over again at every given opportunity.
Now, that after 20 years Afghanistan is Taleban again, suddenly everyone rediscovers the world’s most urgent needs can only be fulfilled using Afghan resources?
If China does invest in Afghanistan and further its relationship with the Taliban, it has the potential to not only bring increased influence and resources to Beijing but also could provide the ruling Taliban the one thing it needs most to hold on to power: hard currency.
Our view: If rare earth from Afghanistan should be the answer, then it must have been a stupid question.
Fact is, the Indians had a really close look at Aghan mineral resources, the Iranians, too. Still, for the past 20 years nothing has been done there.
Fact is also, there are 120 million tons of TREO in known deposits outside China, enough for hundreds of years of growing world demand. After everything else has been depleted, one can look at Afghanistan again.
By the way, the world’s largest RE deposit is still in North Korea, as our readers know well from our June 23, 2020 issue.
The US withdrawal from Afghanistan actually pits Russia and China against each other in Central Asia.
China is being literally sucked into Afghanistan, on the need to prevent, that a restive Afghanistan endangers western China’s Xinjiang through porous Central Asia borders.
China’s activities will be interesting for the Russians, since all Central Asian Countries are members of the Commonwealth of Independent States (CIS), which clearly defines Moscow’s sphere of influence.
Both countries kept their respective embassies in Kabul fully manned during this period.
Meanwhile, in India:
Dr Sinha said the explorations have given encouraging results on possible deposits of uranium, lithium, helium and rare earth elements (REE) in Arunachal Pradesh, which is not found anywhere else in the country.
A news, that will certainly not go down well in Beijing, as China claims ownership of the northern Indian state Arunachal-Pradesh, which borders Tibet, Bhutan and Myanmar.
China does not recognize the “McMahon Line” border, which was agreed in 1914 between Tibet, a representative of the Republic of China and the British Empire.
The Indian state contains the monastery at Tawang, the birthplace of the 6th Dalai Lama. Tawang may be the place the current Dalai Lama chooses for his reincarnation, outside China’s borders.
Within China’s juridiction, the reincarnation of a senior Lama is strictly subject to government approval. There is a bit of historical precedence to that, the disappearance of the 6-year old Panchen Lama in 1995.
Prices are a tad weaker than our last posting, particularly the heavy rare earths, the oxides of gadolinium (-3.8%), dysprosium (-2%) and terbium (-2.3%) and on the light end NdPr 75/25 (-1%). Nothing dramatic, the price levels are more than just healthy:
Whenever banks comment on rare earths, it tends to be amusing.
However, CITIC were the mother of CLSA, the last professional analysts who used to be active in the rare earth sector, so CITIC will likely have some residual competence. And CITIC are a Chinese bank.
New national legislation, The Regulations on Administration of Rare Earths Management, will be promoted as soon as possible to provide for high-quality rare earth industry development, targeting unprecedented heights.
CITIC predicts a limited increase in Chinese overseas supply in the next five years and that global rare earth supply and demand may be tight for an extended time.
CITIC has raised its price forecast for NdPr in 2021 to ¥800,000 yuan/tonne (US$125,000)/tonne.
As regards overseas supply, they are right. Investors go after everything battery-related, but don’t go for permanent magnets or rare earths.
We assume CITIC refer to NdPr 75/25. The forecast price would be an increase over today of >30%.
This is the graph:
Prof. Dudley J. Kingsnorth already warned years ago that there is a limit on the NdPr price at which replacement kicks in, which in turn reduces the demand. The limit may have changed and definitely the growth rates have changed, but the statement remains true.
There are only two countries with significant demand for NdPr, China and Japan. ~80% of Japan’s demand are covered by Lynas.
The rest of the world - notwithstanding embryonic attempts on local production ex-China - buys sintered NdFeB magnets from China and Japan, whose main active ingredient is NdPr.
As we reported before, for the high operating temperature magnets, i.e. those used in the main demand growth drivers, offshore windtowers and automotive, the NdfeB manufacturers pass the raw material cost increases to the customers.
While the there will be a continued healthy demand increase for NdFeB going forward, the forecast growth rates will likely work out to be somewhat less exponential.
Automotive is a an industry that is notoriously recalcitrant, when it comes to cost increases. Since the automotive industry obviously can’t get a handle on NdFeB pricing and the underlying rare earth prices (i.e. by volume discounts and committing suppliers to cost improvements), it does, what it always has done in such situations: It elmininates the product.
And that is the current trend.
The material, which was developed on the basis of plastic and the rare earth metal gadolinium, is intended for experiment as part of the International DarkSide 20K project to discover dark matter. This experiment is scheduled to begin in Italy between 2025 and 2026. According to various estimates, all the matter that make up planets, stars, galaxies and interstellar gas makes up five to 15 percent of the mass of the universe. The rest is said to be dark matter, which in no way interacts with electromagnetic waves, and therefore remains invisible to most existing devices. Since dark matter is involved in gravitational interactions, scientists are convinced of its existence.
The article in German here.
Thanks for reading and have a delightful rest of the week!