NKorea RE Myth; It is official from WTO: China not a market-economy; Views from Argus and Roskill; SeekingAlpha chips in; RE in Norway;

Rare Earth 2020 June 23

In our last issue we carried the war-monger write-up about North Korea’s strategic metal reserves. With DPRK trying to re-create an international crisis for political gain, reports like that one may may be spun further without any fact checking, so it may be necessary to put things a bit more into perspective.

SRE Minerals claimed having signed a joint venture for the “Jongju deposit” in December 2013 with a North Korean entity.

The deposit was supposedly discovered in 1947, after the Japanese had gone from North Korea, before the founding of DPRK, while the Russians were there. Certainly an ideal time for explorers to roam the rugged North Korean countryside.

Behind this SRE Minerals individuals of doubtful repute. There is a full report from 38North that says:

Highlighting accusations of others along the way that their names had been used to pull off elaborate ruses, I asked Schurmann directly whether or not he thought there was any chance that he, too, had been deceived. “I’ve never been coached,” he said, emphasizing that his assessments of North Korea’s mineral potential were genuine. “I obviously have been pointed to the right direction and obviously introduced to this gold mine and that gold company, and this rare earth thing. I mean, that’s how they guided me, but the work I’ve done has never been affected by their input. I never got that feeling that they were using me in a sense.”

Probably the whole story is attempted fraud, Western and North Korean conmen trying to outcon each other.

There is no evidence that a deposit of this size even exists.

There is no doubt, however, that North Korea does export some RE concentrate. How much of it is unclear, but our latest count is 13 live rare earth SME in Dandong City on the North Korean border.

Another “Friendship Bridge” at Changbai remains closed and crumbling, so Dandong is single point of entry for land-transport of North Korean export goods to China. Absent rare earth deposits in this Chinese region and no significant customer base there, these 13 companies have no conceivable reason to be at Dandong of all places, if it wasn’t for rare earth supplies from North Korea.

Friendship Bridge between Hyesan (DPRK) and Changbai (China) and the deserted foreign trade center on the China side (June 2013). Dandong marked on the map for reference.

And the gross misrepresentation of this outsized RE deposit finds its way into mainstream media as a given fact, without any fact-checking.

China lost its case, claiming automatic recognition as market-economy 15 years after its accession to the WTO. China abandoned its case, which implies two things:

  1. There was no reason to assume that recognition as a market economy would be automatic, 15 years after WTO accession of China.

  2. China is not a market economy, as EU and US determined before.

This is an enormous setback for China, which had not lived up to its WTO accession promises other than successively reducing import tariffs during the “lost decade” of Chinese reforms 2003-2013 under Hu Jintao (general secretary ) and Wen Jiabao (prime minister ).

Even the totally WTO-non-compliant rare earth export quota management, that China had introduced after joining the WTO, had to be wrestled from China’s hands by force of WTO ruling, not by common sense of a good faith WTO member.

As a WTO member with now officially non-market economy status, China has become an easy target for trade action by anyone.

By ending the dispute China now provides the EU with greater legal certainty to combat low-price Chinese exports with artificially high tariffs.

Essentially, open, low-tariff markets are now deemed a strategic weakness, on both sides of the Pacific Ocean, but not yet in the EU.

This, in spite of fact that US-exports have been thriving since GATT:

US exports development under GATT (with the Trump-Ravine at the end)

Who will pay the price, if the WTO / GATT systems disintegrate? The consumer will pay, all of it.

Thanks for reading.

//Market

Rare earths: Oil refineries ramp up as COVID-19 restrictions ease

Globally, the COVID-19 pandemic has caused a sharp reduction in demand for refined fuels with refineries suspending operations through April. With the easing of lockdown restrictions, demand is slowly returning; plants in the USA and Europe restarted towards the end of May and into early-June.

Roskill View

Fluid catalytic cracking (FCC) units containing rare earths (mainly lanthanum) are used to enhance the oil distillation process to produce larger volumes of light fuels during refining.  Weaker demand during COVID-19 will have led to a reduction in FCC consumption, however, the decline in the FCC market is expected to be mitigated somewhat by new regulations.

Reminder: La and Ce are the biggest volumes of all RE traded internationally.

Argus: Mixed prospects for China’s rare earths market amid Covid-19

China’s rare earths market is facing mixed prospects as global economies and industries reel from the impact of the Covid-19 pandemic. Spot supply is rising as Chinese operations emerge from lockdown ahead of many key consuming countries, but downstream magnet demand is expected to remain sluggish in the medium-term, potentially weighing on rare earth prices for the rest of 2020. That said, Chinese producers remain unperturbed and earlier-stage projects outside China are still striving to move forward, anticipating a longer-term revival in demand from the new energy vehicle (NEV) and wind power sectors in particular.

Honda’s 2020 CR-V Hybrid offers a mix of power and fuel efficiency

The powertrain uses a 2.0-liter inline four-cylinder Atkinson-cycle gasoline engine and two electric motors using magnets with no heavy rare-earth metals – a generator/starter motor and 181-horsepower propulsion motor – producing a system output of 212 horsepower, without the need for a typical automatic transmission.

An Update On The Rare Earths Sector And Some Promising Rare Earths Stocks To Consider

A brief review of the rare earths sector and latest news, including the US rare earths funding bill.

A look at some promising rare earths miners with projects in USA, Australia, and Canada.

Rare earth sector risks and further reading.

Comment: Some advice by sponsored experts. We’ll bring you the first half 2020 stock performance of RE-related, stock-listed companies during first week of July.

//Policy

China loses landmark WTO dispute against EU

China spent four years fighting for market-economy status, a designation that would give it stronger footing with commercial partners while also curtailing their ability to retaliate over trade disputes.

This week, China quietly lost that battle.

China temporarily suspended the dispute after the WTO issued its interim report in 2019, which prevented the ruling from going public. Beijing declined to restart the dispute before the deadline to do so expired on June 15.

Comment: This is a hammer.

Canada reaffirms commitment to US critical minerals supply chain

“By advancing this joint action plan, we are joining forces to secure access to the critical minerals — including uranium, rare earth elements and those needed for next generation batteries — that can play a key role in our economic recovery post Covid-19. These efforts will not only boost our competitiveness in global markets and create jobs for Canadians; they will also help to develop cleaner technologies to reach our net-zero target,” said O’Regan.

Comment: Typically such talks end when both parties find out, that expectations of the respective other party to pay for the exercise won’t materialise.

Estonia to become associate member of CERN

Tanel Rebane, director of the Trade Development Agency at Enterprise Estonia, said that the technologies and innovation developed under CERN cooperation projects are directly applicable in other fields, including industry.

"We can see that in the IT and electronics sectors, for instance, but also with businesses working on the basis of  new technologies and hi-tech more broadly, there is great potential," Rebane said, enumerating Estonian companies software company GScan, ultra-capacitors manufacturer Skeleton, Artec Design, chip-testing lab Testonica Lab, electronics firm Estel and Sillamäe-based rare-earth processor Silmet, as some of those that could potentially engage in cooperation with CERN in future.

Comment: Silmet is a daughter company of Neo Performance Materials, who still are 69.36% owned by Oaktree Capital on March 11, 2020

//Science

Why the far side of the Moon so different from near side

The composition of the Moon’s near side that is perpetually Earth-facing is oddly different from its far side which always faces away from Earth and scientists think they finally understand why.

These are linked to an important property of rock signature KREEP — short for rock enriched in potassium (chemical symbol K), rare-earth elements (REE, which include cerium, dysprosium, erbium, europium, and other elements which are rare on Earth) and phosphorus (chemical symbol P), according to a study published in the journal Nature Geoscience.

//Mining

Academic warns deep sea mining activity could affect CO2 absorption rates in ocean ecosystems

Professor Sweetman explained that this work is critical for understanding the effects of deep-sea disturbance, such as mining. The area he currently works in the Clarion Clipperton Fracture Zone (CCFZ), Pacific Ocean has been extensively surveyed for its deep-sea mining potential and teams of researchers are now conducting surveys to assess the biodiversity of the CCFZ to understand what impact deep-sea mining might have.

Increasing demand for metals and rare earth elements for use in electronics and renewable energy infrastructure is accelerating research into deep-sea minerals and their potential for exploitation. The CCFZ is of particular importance due to high abundances of polymetallic nodules—ca. 30 billion tons. Nodules here are rich in manganese, copper, cobalt, nickel, and trace metals such as molybdenum, lithium and rare earth elements.

Carbonatite Rare Earth Elements Deposits

Carbonatites are divided into four major groups according to the dominant carbonate mineral:

  1. Dolomite-carbonatites/beforsites: Dolomite (CaMg(CO₃)₂) is the main carbonate mineral.

  2. Calcite-carbonatites: Calcite (CaCO₃) is the main carbonate mineral. This group is further divided into sovites (coarse-grained rocks) and alvikites (medium to fine-grained rocks).

  3. Ferro-carbonatites: Dominant minerals are typically hematite (an iron oxide) and calcite. 

  4. Natro-carbonatites: Dominant carbonate minerals are sodium-, potassium-, and calcium-rich carbonates. The only known occurrence of this carbonatite is at the Oldoinyo volcanic center.

Comment: Geology for Investors. “Everything you ever wanted to know about carbonatite but never dared ask.” Africa-centric.

//Companies

Estonia doesn’t want and can’t safely store radioactive powder, so 2,000 drums of it may be coming to southeastern Utah

The controversial plan to ship 660 tons of radioactive material more than 5,000 miles from Estonia to San Juan County, Utah, involves a globe-spanning series of connections dating back years.

In 2019, Energy Fuels Resources, which operates the only conventional uranium mill in the United States near Blanding, Utah, applied for a permit to reprocess radioactive powder stored at the Silmet rare metals plant in Sillamäe, Estonia, for its uranium content.

Energy Fuels agreed to purchase and import the material to its White Mesa Mill facility as “alternative feed,” meaning the drums, which are more than 0.05% uranium by weight, will be reprocessed into yellowcake uranium used in nuclear reactors.

Medallion Resources Announces $250,000 Private Placement

“The Company was presented with the opportunity to complete this small financing with long-standing investors,” said Mark Saxon, Medallion President & CEO. “The financing allows us to press forward with business opportunities in the US and continue to engage with potential financial and technical partners.”

Blackstone Resources Sells Exploration Interests For CHF 22 Million

In total, Blackstone held 50 sq. km exploratory mining concessions located across three different rare earth sites in Norway, which it successfully developed prior to the transaction.

Blackstone decided to sell its position in the project to focus on other areas which are more aligned with its business interests. 

During the sale, there was strong interest from both Canadian and Australian investors.

Comment: EURare analysed Norwegian RE deposits

Altona Energy advancing due diligence over Malawi rare earth opportunity

Altona Energy Plc’s (LON:ANR) interim financial results, for the six months ended December 31, reflect on a period of transition in which is assessed multiple opportunities.

More recently, in May 2020, it engaged with a Malawian mining consultancy which is acquiring mining rights for rare earths in southern Malawi.

“The board believes that this project has a high degree of merit and we are currently carrying out due diligence, which we believe will take less than three months,” said Christian Taylor-Wilkinson, interim chief executive.

At the same time, Altona said it is also continuing its search for realistic funding solutions so that it can provide capital to remain solvent until a project is secured but also avoid excessive dilution.

Altona’s shares remain suspended on AIM, until funds and assets are sourced.

Comment: Ionised clay deposit. From the December 2011 Mulanje Massif NI43-101 “The scattered meagre data do not allow any estimate of a REE mineral resource in the Chambe Basin.” It is a nature reserve, 1,600 m high, only reachable by footpath. Irving Resources held on to this for 10 years. Not sure, what a due diligence should look like in this case.