NdPr Prices: Kingsnorth-Line Holds For Now; Demand Growth Outpaces Supply, Replacement To Kick-In; China Fake Certifications; Toxic Secrets; Federal Funding; Greenland Mining License For Orano
2021 Rare Earth January 28
We are not a price reporting service, just a humble, opinionated blog, however, RE prices are on everybody’s mind, it is the elephant in the room, so here we go:
In US$ terms the median ex-works NdPr price seems to stay just below the glass ceiling of US$70/kg, what Prof. Dudley J. Kingnorth called the limit at which replacement would kick in.
Readers asked: This price is for NdPr “75/25” (there is also NdPr “80/20”), ex-works China, median
Projected NdPr demand for 2025 is a mind-boggling 137,500 t, meaning that output of NdPr would need to grow around 70-80% to cover the increased demand until then, plus growth beyond 2025.
That in turn would require a processing capacity of ca. 600,000 t as REO, almost 3 times of what is available in China right now.
In terms of output that is unattainable, so replacement of NdPr becomes a keenly pursued option.
Replacement? Are you kidding?
Everybody tries to convince one another that NdPr is irreplacable in permanent magnets, a must have, and that there are no alternatives to facing a growing disparity between NdPr supply and demand with accompanying price increases, which will eventually lure partly oblivious, partly recalcitrant investors to the sector (to pick up, whatever Chinese investors may have left-over for them).
With the current development in permanent magnet raw materials, it is only a question of perhaps one or two quarters until higher permanent magnet costs drive up cost at automotive manufacturers.
About 80% of NdFeB applications offer potential for partial replacement:
Automotive alone is 50% of NdFeB demand. Anyone who knows the automotive industry also knows, that no self-respecting automotive maker will become a playball of capricious raw material pricing, ever. At cut-throat margins of mass produced vehicles it is a matter of survival to stay in the drivers seat when it comes to cost.
Apart from the traditional permanent magnets as replacements, 2 new examples for potential replacement: For low end applications NdFeB could apparently be replaced by CeFeB and in demanding applications there seems to be potential replacement in the form of iron nitride magnets, such as EV motors. Or you replace the type of electric motor altogether.
On a longer shot, it may become possible to replace NdFeB magnets even in offshore wind towers.
China’s rare earth industry is following such research closely, while pressing ahead with it’s own research in the very same direction.
Aggressive replacement could flatten the projected demand growth and the “Kingsnorth-Line” for NdPr may continue being the point of reference.
Finally even the entire rare earth story might fall apart and return to the obscurity it arose from.
With the anticipated sale of Hitachi Metals permanent magnet business to China, China will have in excess of 90% of the world output of permanent magnets.
Why this is so and will remain so:
Raw materials cost of China-based permanent magnet producers are 13% lower than outside China, no matter how you twist and turn. That also explains, why there is only a minor market for NdPr outside China.
There is no VAT refund upon export of rare earth raw material from China, while for export of permanent magnets the full VAT of 13% is refunded.
The big picture is no different, and this trade manipulation practise is at the very core of de-industrialisation in the West and trade imbalance with China.
Unless governments (some of whom we count among our valued readers) get the wake-up call, finally get their act together and engage China on this elemental subject, this fundamental problem will remain forever, not only in rare earth and permanent magnets, but on a whole.
Distinguished rare earth expert Jack Lifton, father of the term “Technology Metals”, said 7 years ago in a Ucore video series that the only two surviving rare earth mines in US should be Ucore’s Bokan and Rare Element Resources Ltd’s Bear Lodge (49% Synchron = General Atomics). Mountain Pass at that time was Molycorp incl. Neo Performance Materials and therefore may not have been part of the consideration.
This is a correct assessment, if one goes strictly by availability of molecules and blacks out all other factors.
Ucore’s Bokan deposit’s composition should be the envy of many junior RE miners, high contents of heavy rare earths and comparatively lower contents of hard-selling, oversupplied products:
However, Ucore’s preliminary economic assessment (PEA) had been disarmingly honest when it put the expected life of mine output of Bokan-Dotson Ridge at 20,104 t as rare earth oxide in total (PEA page 195):
The a.m. assumes, that indeed each and every element will be recovered at the favourable recovery rates in the PEA and separated, also that all is saleable at current China ex-works prices.
The total output quantity of light rare earths Ce and La over the 11 year life of mine would not satisfy even one year of current US consumption of these two.
On the other hand, given sufficient NdPr supply from elsewhere, the contents of heavy rare earths Dy and Tb produced during 11 years would be enough for aiding the production of 10,000 t of permanent magnets per year, which is about the size of one permanent magnet production site.
Source: Ucore PEA page 17
Pre-tax revenue of US$ 842 mio minus average overall life of mine operating cost of US$ 642 mio leaves no room for returning project capital cost, without even having considered the nitty-gritty such as taxes, royalties, amortisation, etc.
What could change the commercials is the Onshoring Rare Earths Act of 2020, presented by Texas’ Sen. Ted Cruz to the Senate on May 12, 2020, comfortably resting in the Senate Committee on Finance ever since, and its twin-brother, presented by Rep. John Joyce, that has been sitting in the Congress Sub-Committee on Select Revenue Measures since July 29, 2020.
If enacted, among other effects, the tax-payer would pay the burden for the proposed subsidies, while the (Texas-based, surprise, surprise) industries, who have already been benefiting from cheap China imports, would be reaping further benefits.
Thank you for reading and have a rare-earthy day!
//Environment
Toxic secrets behind your mobile phone: Electric cars, wind turbines and solar panels... how our so-called green world depends on the mining of rare metals which is a filthy, amoral industry totally dominated by China
[by the way of rareearthsinvestor.com]
Past the suburbs of the Chinese city of Baotou, below a quadruple carriageway, a lonely path led me to an embankment bristling with pylons, each with a security camera watching for intruders.
This is how I reached the Weikuang Dam – an artificial lake into which metallic intestines regurgitate torrents of black water from the nearby refineries. I was looking at ten square kilometres of toxic effluent. After observing this immense, disintegrating landscape, my guide and I decided to move before the security cameras alerted the police to our presence.
A few minutes later, we arrived in a village called Dalahai on another side of the artificial lake. Here, the thousands of inhabitants breathe in the toxic discharge of the reservoir as well as eating produce, such as corn and buckwheat, grown in it.
Cancer affects the local population and many villagers have died. The hair of young men barely aged 30 has suddenly turned white. Children grow up without developing any teeth.
Comment: Guillaume Pitron as emphatic and as well researched as ever.
Chinese environmentalists up in arms over forest destroyed to make way for vineyards
The authorities in Gansu have promised to investigate amid a growing outcry over the loss of the forest near the ancient Silk Road city of Dunhuang
The site was intended to protect the area from desertification and its loss could trigger ecological catastrophe
The report, published on Wednesday, prompted an editorial from the Communist Party mouthpiece, People’s Daily, which said the deforestation could cause serious damage to the environment and those responsible must be held fully accountable.
He said it was shocking to see such cases happening today, adding: “If the defendants, including the authorities who were supposed to monitor the environment, escape criminal punishment, then that would show our laws only exist on paper, and the rule of law has failed.”
Comment: Such cases are only a tip of the iceberg. In industry, also the ones enabling metal smelting, the worst thinkable factories are in such challenged areas, where economic survival trumps environmental concerns.
//Policy
U.S. Department of Energy to Invest $28.35M in Advanced Processing of Rare Earth Elements and Critical Minerals for Industrial and Manufacturing Applications
The U.S. Department of Energy’s (DOE) Office of Fossil Energy (FE) has announced $28.35 million in federal funding for cost-shared research and development projects under the Funding Opportunity Announcement (FOA) DE-FOA-0002404, Advanced Processing of Rare Earth Elements and Critical Minerals for Industrial and Manufacturing Applications.
This FOA seeks to fund research and development projects that will focus on developing innovative midstream processing technologies that will be environmentally benign, and potentially lower capital costs and operating expenses. Phase 1 applications for two areas of interest (AOI) are being sought at this time:
AOI 1: Advanced Process Development for Production of Rare Earth Metals (REM) and Co-Production of Critical Minerals (CM) from Coal-Based and Alternate Resources
AOI 2: Production of Critical Minerals (CM) (Excluding Rare Earth Elements or REE) from Coal-Based and Alternate Resources
This FOA requires project teams of subject matter experts and stakeholders from across the entire CM and REE value/supply chain. This will include experts from the areas of resource assessment and characterization; mining and minerals processing; pilot-scale REE and CM facility developers and operators; advanced separation and purification developers; reduction to metal process developers; and a minimum of one industrial partner whose expertise is in manufacturing and/or production of intermediate and/or end-use products containing REE and/or CM.
A maximum of eight awards is anticipated for Phase 1. Applications must be submitted by March 1, 2021. For more information, visit FedConnect.
//Market
Bribes, fake factories and forged documents: the buccaneering consultants pervading China’s factory audits
The Post interviewed five Chinese consulting firms, each of which said a bribe would be necessary to pay off the auditor – many of which are from well-known international companies – and get access to accredited platforms that could open doors to supplying some of the world’s top brands.
“For auditors from one firm, you give them a red packet stuffed with cash on the inspection day. Auditors from another firm dare not take the red packet at the scene, so we would transfer the money to them one week before inspection day,” said a representative of a Shanghai-based consultant, referring to money-filled envelopes traditionally given out on special occasions.
In more sophisticated instances, “the auditor might say, ‘I have forgotten my watch, a Rolex, in your factory – once you return it to me, I will ensure that your factory passes’”, said Renaud Anjoran, a Hong Kong-based supply-chain consultant, who said he has watched the trend balloon in China and neighbouring manufacturing hubs.
Comment: That is the same for ISO and other certifications in China’s raw material industries.
China Evergrande New Energy Vehicle Co attracts investors to raise $3.4 bln
Property giant China Evergrande’s Hong-Kong listed electric vehicles firm said on Sunday it would bring in six new investors to raise HK$26 billion ($3.4 billion) to fund technology research and repay debt.
China Evergrande New Energy Vehicle Ltd will issue 952.4 million shares at HK$27.3 each to the new investors who include China Gas Chairman Liu Minghui and Chan Hoi-wan, spouse of Joseph Lau who is a Chinese Estate shareholder, the firm said.
Comment: The EV market needs a new-entrant as much as we need a third shoulder. It may drive up demand for NdFeB magnets beyond sustainable limits.
//Science
Magnetic attraction: GE researchers tap healthcare experience to scale-up offshore wind
Using superconducting magnets could eliminate the need for rare earth materials in wind turbine generators and make for lighter more powerful machines
In January 2021, a multi-disciplinary team of engineers at GE’s Research Lab in Niskayuna, New York was awarded US$20.3M in follow-on funding by the Department of Energy’s Wind Energy Technologies Office to accelerate the design and testing of a new superconducting wind generator.
The team at GE Research, which includes pioneers in scaling superconducting magnet technology for magnetic resonance imaging (MRI) scanners, is applying decades of experience to develop a more powerful generator for offshore wind turbines.
YInMn Blue is the first new blue pigment discovered in 200 years
The first new blue pigment to be discovered in the last 200 years is now for sale — but it’ll cost you a pretty penny.
The shade — dubbed YInMn Blue after its components — was created accidentally by chemists at Oregon State University back in 2009.
Eleven years later, the Environmental Protection Agency in May officially approved the vivid hue for commercial use.
The color’s appeal comes in part from how opaque it is, meaning not much of it needs to be applied for a good coat, according to Artnet News.
It’s more durable than pigments like Prussian blue and is also safer than Cobalt blue, which is a suspected carcinogen.
Plus, YInMn can be used for energy-saving coatings — because it strongly reflects infrared radiation, keeping it and whatever it adorns cool.
Comment: Could this be behind the unexpected price rise of yttrium oxide?
//Companies
Shares Magazine - Mkango Resources (MKA) - William Dawes, CEO
AIDEA BOARD APPROVES FIRST STEP TOWARD UCORE’S ALASKA SMC DEVELOPMENT; CORRESPONDS WITH SIGNIFICANT RISE IN REO PRICES OVER 2020
Halifax, Nova Scotia--(Newsfile Corp. - January 21, 2021) - Ucore Rare Metals Inc. is pleased to announce that the Board of Directors of the Alaska Industrial Development and Export Authority ("AIDEA") unanimously passed a resolution authorizing the formalization of the preliminary due-diligence process that Ucore has been conducting with AIDEA staff since October of 2020. Ucore had then approached AIDEA regarding a prospective US$3.5-million investment for the development and commercial-scale operation of Ucore's Alaska Strategic Metals Complex ("Alaska SMC" or the "Project"), planned to be built in Ketchikan, Alaska, as the first development component of the Company's 100% owned Bokan-Dotson Ridge Rare Earth Element Project ("Bokan" or "Bokan Project").
Comment: Ucore’s preliminary economic assessment (PEA) had been disarmingly honest when it put the expected life of mine output of Bokan-Dotson Ridge at 20,104 t as rare earth oxide in total (PEA page 195).
LYNAS ANNOUNCES PLANS TO BUILD RARE-EARTH SEPARATION PLANT IN TEXAS
This project is scheduled to be completed in accordance with the Department of Defense timetable and as part of the Lynas 2025 plan. Detailed costs are still being finalized; Lynas expects Department of Defense funding to be capped at approximately $30 million.
Lynas will also be expected to contribute approximately $30 million under the agreement. The plant is expected to be located in Texas. Once operational, the plant is expected to produce approximately 5,000 metric tons per year (m.t./yr) of Rare Earths products, including approximately 1,250 m.t./yr of neodymium praseodymium (NdPr). The plant will be able to receive material directly from the cracking & leaching plant that Lynas is developing in Kalgoorlie, Western Australia.
Comment: A boon for Blue Line Corp, the Lynas distributor in the US, on whose land the plant will probably be built.
Quantity based on Mt Weld composition probably closer to 1150 t of NdPr, 2400 t of La, 1200 t of Ce, 200 t of Sm. Projected sales would be ~US$ 100 mio, in case of La and Ce below cost. Which is OK, as long as NdPr price remains high.
This deal leaves MP Materials out in the cold for the time being.
Appia Energy confirms high-grade mineralization at REE property in Saskatchewan
Appia Energy (CSE: API) announced the lithogeochemical assays from the diamond drilling program completed on the company’s Alces Lake property confirmed high-grade rare earth element, gallium and uranium mineralization.
The Richard zone drill holes (RI-20-004 and RI-20-005) have confirmed that high-grade mineralization with grades consistently over 8 wt% TREO have been intersected over 145 m strike length along the WRCB zone (Wilson, Richard, Charles and Bell zones combined). The WRCB zone outcrops at surface and starts as shallow as 10 m beneath the surface, representing an easily accessible high-grade monazite asset.”
Labor calls for JobKeeper inquiry as minerals miner Iluka repays $13.6 million in subsidies after recording strong sales
Iluka Resources, a large mineral sands miner, has followed the lead of Toyota and Super Retail Group in announcing it will return JobKeeper payments – in this instance to the tune of $13.6 million.
“Iluka received $13.6 million in JobKeeper subsidies from the Australian government following a significant decline in zircon demand and associated revenue in Q1,” the company said in its latest quarterly review to shareholders.
“Given the company’s subsequent financial performance, Iluka has decided to return this voluntarily,” the review said.
Iluka reported net cash of $50 million and free cashflow of $36 million as at December 31, as well as an increase in closing inventory of $191 million since the start of the year.
RER gets funding boost
“Rare Element Resources (RER) and its partners, General Atomics and its affiliates, subject to continuing negotiations, were selected to receive an award of $21,989,530 to construct a demonstration-scale rare earths separation and processing demonstration plant in order to advance the Bear Lodge Project,” says George Byers, RER Advisory Board.
The demo plant is expected to cost $35-40 million and a site has not yet been chosen.
French nuclear giant Orano obtains uranium exploration permits in Greenland
However, the permits are granted on special terms, where the company cannot expect to obtain an exploitation permit automatically.
Sermitsiaq said that if the company succeeds in discovering uranium, it will be a question for the Self-Government and politicians whether to give the company the opportunity to be granted an exploitation permit.
Unlike the Kvanefjeld project, where Greenland Minerals is focused on rare earths, and where radioactive material is a by-product, Orano's exploration areas are much further away from inhabited areas.