NdPr Price Drops; China RE Exports Continue Recovery; RE Stocks Doing Well, Magnet Stocks don't;

2020 Rare Earth December 11

NdPr seems to have peaked, the median price dropped below the psychological barrier of RMB 500/kg Ex Works China:

We give you two charts: One from November 1 until today and another from December 1 until today, sorted according to price increase ratio:

It is a mix of organic cost and price increases (resource tax applies since September, not applicable on imports) and “law-hype” that has led to current quotations, probably similar to the “visit hype” last year, which sent Chinese permanent magnet and rare earth stocks upwards, along with rare earth prices.

This is absurd, as the prospect of 30-40% lower sales volumes owing to an export boycott should have the exact opposite effect on both, share prices and product prices.

We asked before: Since when does the Chinese government require a law for messing with exports?


China rare earth exports continue their slow recovery from their low in July:


When we look at China, what are we looking for these major topics:

  • The new rare earth industry development policy 2021-2015 in the 十四五, “14-5”, the 14th 5-year plan, e.g.

    • Will the planned exports be reduced further (2016-2020 plan target reduction to <30,000 t REO)?

    • Will imports of raw material be made official part of the plan?

    • Will the “going-out policy”, the investment in resources abroad, continue? (We are in talks with various China entities regard the sale of a rare earth deposit, and there is uncertainty regarding policy support)

    • So far, very little trickles through

  • Import tariffs: Currently temporarily suspended, does the suspension continue? However, 13% VAT applies, which many junior miners don’t recognise in their planning

  • VAT: Changes to VAT refund upon export, currently zero, will have an impact on prices.

  • Domestic mining policy: Currently approval of mining licenses is rather slow for resource-preservation and environmental protection reasons. There were calls for a new assessment of domestic RE resources.

  • Production quota of MIIT


Rare earth stock prices, good news: All are up year-to-date, except for a handful, among them:

  • Ucore: Lost one of the half a dozen or so court cases regarding IBC, which will cost Ucore six digit dollars for starters. The strategy to hold-on to the tiny Bokan deposit and plug-in the RapidSX process is basically a continuation of what they tried with IBC’s - in RE mildly successful - SuperLig before. Bokan’s 20,000 t REO (see PEA, which was removed from Ucore’s website but is available at Sedar) in our view are too small to be competitive and not feasible. -58% year-to-date.

  • Rare Element Resources: One-man-company. Still working on the separation process and the pilot plant with German sister company in the General Atomics group. They managed to separate some NdPr, but not much else. The company also announced, that it was looking for (government) funding, i.e. 49% shareholder Synchron (=General Atomics) will probably not offer any money in getting REEMF up to speed. -41% year-to-date.

  • Northern Minerals: They could have had it all, but then the Australian government last year denied approval of investment by the largest rare earth manufacturer on the planet, China Northern Rare Earth Group, who found NTU’s xenotime a good fit. That broke the company’s neck. NTU already has a substantial number of Chinese shareholders, the majority of board members is Chinese (regardless of passport) , all of whom apparently can’t really help Northern now. -40% year-to-date.

  • Iluka: Spin-off of their royalty company has changed the underlying valuation. -36% year-to-date due to the spin-off, which Iluka shareholders got compensated for.

Others like Premier, eMetals or Chatham don’t really play any role.

China rare earth stocks are a mixed bag, nothing spectacular to talk about.

But China rare earth permanent magnet stocks look bad. All but 3 companies stock prices are down year-to-date, most of them down double-digit, probably on rare earth price increases, that they can’t pass on to the magnet customers while fighting for market share.

We’ll do the statistics for 2020 beginning January 2021.


Thank you for reading and have a terrific weekend ahead!


//Companies

Rare-Earth Element Prices Rise as Medallion Approaches Key Technical Milestone

“With current and projected pricing of NdPr we expect the economics from our independent techno-economic assessment to look very positive,” said Mark Saxon, Medallion President & CEO. “We welcome approaches by prospective business partners as we progress towards final design and engineering.”

Comment: The REO price increase is not a standalone, raw material prices including monazite rose first. Medallions concept is a processing and service concept without self-owned raw material base, a pure margin play like Aurubis in copper. They will have to compete with Chinese buyers for raw material.

Peak Resources’ new MD picks up the torch

Peak Resources has announced that incoming MD, Bardin Davis, has commenced his executive duties.

Bardin was appointed a Director of the Company on 20 October 2020 and had been expected to commence the role of Managing Director on 4 January 2021.

The commencement of the executive duties has now been brought forward to 9 December 2020.

Bardin’s immediate focus will be to finalise the receipt of the Special Mining License (SML) over the Company’s 100% owned Ngualla rare earth deposit in Tanzania.

Comment: Finalise the receipt? Like signing off for a DHL package? Writing off the asset in Tanzania - in the books with A$59 mio - would be terminal, so anything goes.

Australia pushes to diversify rare earth supply chains

Australian companies are continuing their efforts to broaden the global rare earths supply chain and reduce China's dominance of the production and distribution of these critical materials, but progress remains gradual, with multiple funding and logical challenges persisting.

Comment: Peptalk from Argus, our preferred forecaster. In the one or the other case they should be a tad more discerning.

//Politics

Katherine Tai: Joe Biden’s US trade chief pick ‘unmatched’ on China issues, would not be soft on Beijing

As America’s chief enforcement lawyer on China trade issues during the Obama administration, Katherine Tai was charged with corralling partners to join the United States in a trade dispute against China on restrictions involving exports of rare earth elements – a market dominated by China.

It was a landmark case – one that stoked regional tensions between China and its neighbours, but which also helped raise awareness on some of the major grievances that trading partners had with Beijing, a decade into its World Trade Organization (WTO) membership.

Tai helped recruit 18 other economies to join the 2012 suit, including Australia, the European Union, Japan, Russia and South Korea. China dropped the export quotas in 2015, but the issue of rare earths has rumbled on against the backdrop of wider trade issues, as bilateral relations have deteriorated.

Comment: That is a big calibre appointment. Yale and Harvard educated, easily among the best the US can offer. A refreshing change.

Minister: Environment Ministry will study REE exploration report thoroughly

 The Ministry of Environment and Water (Kasa) has given its assurance that the Environmental Impact Assessment (EIA) report for the exploration of Rare Earth Elements (REE) in Kedah will be studied professionally and meticulously to ensure environmental sustainability.

Its Minister Datuk Seri Tuan Ibrahim Tuan Man said that until now the Department of Environment (DOE) had not received any application for approval of the project’s EIA report.

Comment: We discussed this in our previous issue.

Aim and influence of China's enforcement of "Export Control Law"  Focus on handling rare earths, Japan does not need to panic for the time being

China has enforced the "Export Control Law". Let's think about its aim and impact, and how Japan should deal with it.

 The Chinese government stated that it would "provide an open and transparent business environment," but announced products, technologies, and software related to data encryption as part of the target items. It also includes equipment related to "quantum cryptography," which is the next-generation cryptographic technology. We will continue to announce the target items from time to time, but the focus will also be on whether or not rare earths will be targeted.

 In the past, there was an Export Control Committee for the Communist Bloc (COCOM) among Western countries, which regulated the export of military technology and strategic supplies to communist countries. Cocom existed from 1950 to 1994, but since the collapse of the Soviet Union in 1991, its significance has diminished, so it has shifted to the "Wassenaar Arrangement." There, a list of items subject to export control is established for the purpose of preventing excessive accumulation of conventional weapons in third countries.

//Science

Scientist Working On Long-Lasting, Fast-Acting Disinfectant

Discouraged by long dwell times and short windows of effectiveness, a scientist is hoping to create a disinfectant that performs better than the rest.

Christiana Drake is developing a disinfectant that she hopes will only require a 30 second dwell time and will work for days, reports KSAT. Drake hopes to accomplish this by leveraging the power of cerium oxide nanoparticles, which will be suspended into the disinfectant so that they can be sprayed on a surface. Once sprayed, the disinfectant would create a film that would continue to regenerate the surface that was targeted.

To develop the product, Drake is teaming up her company, Kismet Technologies, with Sudipta Seal, PhD, a material science engineer at the University of Central Florida who specializes in cerium oxide nanoparticles. According to KSAT, these nanoparticles have been used for other purposes, one being to heal diabetic wounds or damage caused by exposure to radiation.