On China: RE-Related Output 2021, RE 5-Year Plan, First Half 2022 Quota, 2021 RE Imports & Exports; Funds Flee RE Sector; Murky Quadrant; ASM's Uranium; January RE Stock Performance;

Rare Earths 2022 February 6

Feb 6

China’s 2021 Output of Rare Earth Functional Materials

On December 29, 2021 this immortal piece of bureaucrat prose was published:

China’s 14th Five Year Plan for the Raw Material Industries

Adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 19th National Congress of the Communist Party of China and all the 19th Plenary Sessions, base on the new development stage, fully, accurately and comprehensively implement the new development concept, and accelerate the construction of a new development pattern to promote the theme of high-quality development is to deepen the supply-side structural reform as the main line, with reform and innovation as the fundamental driving force, to meet the people's growing needs for a better life as the fundamental purpose, to coordinate development and [national] security, and to improve the advanced industrial foundation and industrial chain. Modernisation level, focus on optimising traditional industries and product structure, cultivating and expanding new material industry, accelerating information technology empowerment, supplementing and complete the industrial chain shortcomings, realise low-carbon and recyclable, and promote high-end industrial supply, rationalisation of structure, green development, digital transformation, and system security, so as to promote the construction of a manufacturing power to a new level and make a good start for the comprehensive construction of a modern socialist country , start a good start to provide strong support.
Non-ferrous metal industry: Promote the green and efficient development of mechanical tunneling, continuous mining, and ion adsorption rare earth mines mining, rare earth polymetallic ore associated resources and high-efficiency utilisation of salt lake lithium and other resources, material recycling in the extraction and separation process, research and development of new technologies such as ultra-high-purity metal and target preparation. Promote high cleanliness and high homogeneity metallurgy, high performance synthesis gold short process preparation, high-performance rare earth permanent magnet material selection and precise infiltration and other technologies, intelligent unmanned mining, mine safety management IoT and cloud services, artificial intelligence batching and production scheduling, virtual simulation of key processes, metallurgy
On-line monitoring of refining and separation, intelligent process control, on-line inspection of machine vision quality and other intelligent manufacturing technologies engineering. Promote efficient sorting and pre-selection of low-grade complex ores, efficient comprehensive utilisation of tailings and red mud, industrialisation of technologies such as the harmless disposal of hazardous wastes containing fluorine and arsenic, and the balanced utilisation of high-abundance rare earth elements.

29 pages of gibberish, throwing around slogans and buzzwords, no comprehensible structure, no hard targets. Compiled by three ministries, Ministry of Land Resources, Ministry of Science & Technology and Ministry of Industry & Information Technology.

Our take: China’s bureaucracy is in full defensive mode.

Make sure everything is there and has been mentioned somewhere somehow, most importantly the Leader’s thoughts on everything & sundry, but make also sure that nothing ever sticks, that everyone and no-one is directly responsible for anyway indefinite tasks.

Management by fear. Ideological fervour rules supreme, mind over matter. It didn’t go well before, and it can’t go well now.

But so far, the approval ratings of the PRC government remain exceptionally high.

First batch of China’s 2022 Rare Earth Quota:

Source: MIIT https://www.miit.gov.cn/jgsj/ycls/xt/art/2022/art_0a6a09d2d7a642e6a0f6a9b11583f4f0.html

For comparison, last year’s first batch:

What happened to the Jiangxi Copper operations: All shares of China Southern Rare Earth Group Co., Ltd., Jiangxi Ganzhou Rare Metal Exchange Co., Ltd., and Ganzhou Zhonglan Rare Earth New Material Technology Co., Ltd. were also transferred to China Rare Earth Group Co., Ltd.

Questions about this quota:

How and where are imports of concentrates and ores considered?
The output numbers from comprehensive resource utilisation efforts, a.k.a. recycling are included or not?

Why are China Non-Ferrous Metals Construction still considered, after they officially retired from rare earth processing business? Or has the decision been reversed?

Just calculate NdPr: Is a planned production quota of 20% less than previous year’s actual consumption in any way meaningful?
Are we to understand this quota as purely procedural formalism, perhaps?
Or is the purpose to make the rest of the world guess the real numbers from reading the intestines of a dead raven?

Real numbers - China’s rare earth raw material imports

China’s imports of rare earth raw materials increased a whopping 40% YoY last year.

According to our tedious research into China’s import statistics the quantity of rare earth raw materials imported to China in 2021 was 169,500 t, after 121,000 t in 2020 and 105,000 t in 2019 (metric tons of product, NOT metric tons of TREO).

75,500 t (+5% YoY) of this is MP Materials bastnaesite concentrate at an average price of US$4.12/kg. Still a pittance compared to China’s current domestic prices, but a large increase over the prices MP used to fetch previously. Perhaps also the impact of rather high freight rates across the Pacific.

MP Materials @MPMaterials

Sadly, some things never change. Let’s welcome @BonitasResearch to the long list of detractors that fail to understand our business, deceptively manipulate competing sets of data, and bet against $MP. A few facts 👇

Hilariously funny, Singaporeans would say: The pot is calling the kettle black!

Roughly 35,000 t came in from Myanmar, comprising of 19,500 t (+15% YoY) mixed rare earth oxides at an average of US$32/kg, 15,000 t (+25% YoY) of rare earth concentrate at an average of US$8.35/kg plus a couple of hundred tons of other rare earth carbonates at an average of US$6/kg.

Monazite shows a large increase in quantity, 51,000 t in 2021, up 5 times over 2020 and also more than twice of 2019 monazite imports. The lion’s share of that, however, was cheap, low concentrate from Rio Tinto in Madagascar coming in at an average of US$880/t. No. 2 largest source of monazite concentrate is Thailand with 13,500 t, followed by the usual suspects like Nigeria.

Officially monazite imports from Brazil were nil, but it is common that unlicensed China importers ask foreign exporters to declare monazite as a different product. So Brazilian monazite may be appearing in the statistics of zirconium ores, for example.

Noteworthy a 5.8 t lot of what could well be Russian high thorium Krasnoufimsk monazite from the mountain of 82,000 t on stock since the early 1960s, amassed during Cold War times. It used to be unsalable and could not be moved for high radiation. Alexander Nesis’ ITC had committed to removing the stock some 5-6 years ago, apparently this may have been another trial shipment.

China’s rare earth raw material imports from Vietnam are still small, but are visibly growing. Also noteworthy the re-appearance of imports from Kazakhstan and some imports of concentrate from Russia, possibly Solikamsk material.

The statistics also show, that certain junior rare earth miners from the principal rare earth resource countries sent samples to China for validation. Very good.

China’s rare earth exports

Back to normal after COVID year 2020

Avid readers will remember, that we do have an issue with the numbers China reports as rare earth exports.

We only count as rare earth exports rare earth compounds and rare earth metals. We don’t think, for example, that products having a content of <10% cerium should be counted as rare earth exports. With a fair amount of exhaustion we count above 10% RE content as relevant, even though also that is controversial.

This way we arrive at significantly lower numbers than what China’s officialdom publishes.

Rare earth compounds

Overall, China’s 2021 rare earth compound exports were only ~3% higher than pre-COVID 2019:

For easier understanding, here the grouped numbers:

Almost 25,000 t (~70%) of China’s rare earth compounds export are lanthanum and cerium. Strongest growth shows in separated neodymium and praseodymium compounds, however, before you get all excited, do note that the much hyped NdPr oxide has been lumped together with other compounds in the last group.

The lack of transparency of the statistics is quite a bit frustrating, however, EU, Japan and to a certain extend US statistics are not one bit better in terms of transparency of rare earth trade, actually they are worse than China’s. Not on purpose, but rather because when the statistics were configured RE were simply not relevant.

Rare earth metals

REM exports are strongly growing.

Also here a lot of different products unidentifiably lumped together:

(*) above includes: Rare earth metal, rare earth metal oxide film/yttrium metal compound, praseodymium-neodymium alloy, other rare earth metals, scandium-yttrium alloy, mischmetal, scandium-yttrium-aluminum alloy.
(**) above includes: Samarium metal, europium metal, scandium metal, other rare earth metals not mixed or fused with each other and lanthanum metal immersed in kerosene.

Please do remember that for rare earth compounds and for rare earth metals there is no VAT refund upon export from China, i.e. the cost to consumers of these products outside China is 13% higher than inside China.

Rare earth magnets

Permanent magnet exports are dwarfing the export numbers for rare earth compounds and rare earth metals:

All the above magnet products get the full 13% VAT refund upon export, except “other Nd-Fe-B alloys”, which do not obtain a VAT refund upon export.

The interesting export growth clearly is in metals and magnets.

Mongolia ready to cooperate with Russia on rare-earth metal deposits — President

Mongolia is among the top twelve countries of the world in terms of natural riches, Khurelsukh said. "The mining industry is very well developed in our country. We are exporting our products to Russia and to China. We have very good gold, coal, iron ore, and rare-earth metal deposits. Our geologists discovered four deposits of rare-earth metals. There can be about 80 of them in the country in total," the President added.

Alaska mine output continues to rise

The U.S. critical mineral list, however, is expected to be updated early this year.
In November, the USGS unveiled a proposed list of 50 critical minerals and metals.
While this seems to be a major jump over the 35 critical minerals on the original list published in 2018, most of the increase is from a much-needed breakdown of the rare earth elements and platinum group metals.
Listed as a single commodity on the 2018 critical minerals list, rare earths are a group of 15 individual elements, each with its own properties, uses, and markets.
The new draft list of U.S. critical minerals names 14 individual rare earths – cerium, dysprosium, erbium, europium, gadolinium, holmium, lanthanum, lutetium, neodymium, praseodymium, samarium, terbium, thulium, and ytterbium – as critical to the U.S.
This list of critical REEs includes all 15 of the lanthanides that make up the second row from the bottom on the periodic table except for promethium, which is an unstable element with a naturally occurring abundance in Earth's crust estimated to be less than 600 grams at any given time.
Scandium and yttrium, which are often considered rare earths due to similar properties and geological affinities to the 15 lanthanides, are listed separately on both the 2018 and draft 2021 critical minerals lists.
The 2018 USGS critical minerals list also considered the group of six platinum group metals as one commodity.
The new draft list names five – iridium, platinum, palladium, rhodium, and ruthenium – as critical to the U.S.

US’ Quadrant plans new Kentucky rare earth magnet plant

San Diego-based Quadrant has since 2001 operated an engineering and assembly hub in Louisville, where it finishes and installs rare earth magnets imported from China. The company in 2013 entered into a supply agreement with a major Chinese supplier, Foresee Group, which has expertise in the type of extremely high-performance sintered NdFeB magnets used in EV motors.
The new plant would be the first commercial-scale sintered NdFeB magnet manufacturing facility to be operational in the US for many years. The technology needed to produce such magnets originated in the US and Japan but the vast majority of magnet manufacturing capacity is located in China. "This is a major development as Foresee/Quadrant likely would not have done this without Beijing's blessing," one US industry observer said.

Later Argus added this correction:

Corrected to clarify that the project is being developed independently of Quadrant's supply relationship with China's Foresee Group

The original announcement of Quadrant is here.

So, before we engage in discussing whether this could be an evil Communist plot to achieve world domination, simply a bet on a supposedly evolving market or something entirely different, let’s look at it.

Are Quadrant and Foresee related parties?

Zhijian Holdings is a private company established in Hangzhou, hometown of Alibaba, in 2010.

According to the company’s business registration, it carries the English name “Hangzhou Foresee Group Holding Co., Ltd.”.

Part of the 21 company group are 4 live companies named “Quadrant”, all 100% owned by Zhijian Holdings/Foresee Group:

The company says it holds about 100 patents.

Source: https://quadrantmagnetics.com/about

None of the live Quadrant companies in China were established before 2010:

Hangzhou Quadrant Technology Co., Ltd., est. 17. September 2010
Hunan Quadrant Technology Co., Ltd., est. 16. July 2019
Hangzhou Quadrant Precision Manufacturing Co., Ltd., est. 31. August 2020
Hangzhou Quadrant Future Technology Co., Ltd., est. 25. November 2021

Quadrant US

According to the quadrant.us website, location of the Quadrant global headquarter is supposed to be at 5186 Carroll Canyon Rd, San Diego:

The building at 5186 Carroll Canyon Rd, San Diego:

But there is no trace of Quadrant:

A search at CorporationWiki brought up 100 companies and 39 people previously and currently registered at that address, none of them named Quadrant.

Perhaps Quadrant just forgot to update their multitude of websites, as an OpenCorporates search brought up this results with a different address (and gives us the name of the CEO):

The alternative Quadrant US headoffice address, Suite 320 at 5405 Morehouse Drive, actually houses the company D&W CPA's, Inc., an accounting and corporate services company. The “D” in D&W could be Wendy Du, Director, and the “W” could be John Jiang Wang, CEO, CFO and company secretary of D&W CPA’s.

So why did Quadrant choose to advertise 5186 Carroll Canyon Rd on their website as the global headoffice address?

The owner of that property at 5186 Carroll Canyon Rd is:

And the company record of Foresee Investment SD LLC is:

Source: https://businesssearch.sos.ca.gov

There are also Foresee Investment I LLC, Foresee Investment Inc., Foresee Investment SJ LLC, all registered to D&W CPA's, Inc.’s office address. Probably the list is incomplete.

Lab Magnetics

This is supposed to he the R&D Center of Quadrant at 1120 Ringwood Ct., San Jose:

Source: East Bay Times “North San Jose building is bought by California investor”

According to this article in East Bay Times on October 5, 2020:

An affiliate of JW Capital Inc., which is headed by San Diego-based investor John Wang, bought the north San Jose building in a cash deal, according to property documents filed on Oct. 2.
JW Capital paid $10.6 million for the 1120 Ringwood building, county documents show. The building is part of a complex called Silicon Valley Research Center.
JW Capital couldn’t be reached for a comment about the deal or any possible future strategy for the property.

Could this be the same John Wang who acts as agent for Quadrant global headoffice?

Very likely, yes.

So, who and where are Lab Magnetics?

CEO Cody Sun.

Trouble is, there is no “2387 Bering Drive” in San Diego as the registration record states, but there is one in San Jose, which is also the address in Lab Magnetics catalogues:

2387 Bering Drive, San Jose Source: Google Maps

The Bering Drive address in San Jose seems to be genuine. Perhaps an administrative oversight in the registration, same as the failure to register the new address, if there actually ever was a move to JW Capital owned Ringwood Circuit.

Considering the XL size of the R&D Center at 1120 Ringwood Ct, it would have also come with an increase of staff. However, we could find no recent job ads posted by Lab Magnetics.

Foreign Corporation

The old registration in Kentucky also featured a director named Cody Sun:

Source: Kentucky Secretary of State https://web.sos.ky.gov/ftshow/

X Mag International had changed the name to Quadrant International in 2014:

Then there is Quadrant Magnetics LLC:

Organiser or sponsor could refer to Hangzhou Quadrant Technology Co., Ltd., est. 17. September 2010.

“Manager John Wang”, could this again be John Jiang Wang from San Diego?

And yet another one:

Again the combination Cody Sun and John Wang.

Here is a version of a non-foreign Quadrant:

The property at 12500 Plantside Drive was acquired in 2017 by Foresee Investment LLC, San Diego and the relevant deed was signed by Sun Hang personally, acting as president.

There was an earlier real estate transaction of Quadrant in Lousiville, pre-2010 for an unrelated property.

From an US point of view, Quadrant are a foreign, non-US company or a US-company, depending on what entity you push to the foreground.

To gain clarity, let’s have a look at what is registered on the other side of the Pacific Ocean.

Clues from China’s company registrations

If Quadrant US itself or in its previous incarnation as X MAG had invested as Quadrant US in China, it would definitely show prominently on the China corporate record.

Well, it doesn’t:

Source: National Enterprise Credit Information System, China

Who is Sun Hang a.k.a Cody Sun?

Sun Hang was born on December XX (we withhold the exact date), 1972 in China’s Hunan Province and graduated Northeast Heavy Machinery College in 1996.

Sun Hang is the executive director/chairman of Zhijian Holdings Group Co., Ltd., a.k.a. Foresee Group, of which he personally holds 90% of the shares:

Mr Sun is also the vice-chair of the Hunan Province Chamber of Commerce in Hangzhou.

As to 3 other persons named Sun in Quadrant/Foresee managements, we are unable to say if these are relatives or coincidental name similarities (there are currently ca. 13 million people named Sun in China): Sun Hongtao 孙宏桃, Sun Yun 孙云 and Sun Ming 孙明.

Resume

There are possibly more Quadrant and Foresee companies out there than we found.

We did not check the capital structure of each of the companies and the actual capital contributions, so uncertainty about who owns how much of what remains.

As we have shown you above, Zhijian Holdings are 100% shareholders of the companies called “Quadrant” in the group and Sun Hang (China name convention is family name first, first name last) is almost certainly identical with “Hang Sun”, the CEO of Quadrant International, San Diego, and “Cody Sun”, director/president at the Quadrant companies in the US.

It is quite possible, that Mr Sun first acquired companies in the US first and then opened the Quadrant “象限” companies in China.

We conclude

No matter if you want to classify Quadrant as a foreign company or not, according to what we found there is probability bordering on certainty, that the beneficial owner, ultimate controller and landlord of Quadrant is in China.

For Quadrant to describe the connection with Zhijian/Foresee as a purely supplier-customer relationship therefore is quite a bit of a stretch, very mildly speaking. It sounds like MP Materials, when they refer to Shenghe Resources as a “distributor”, trying to play down MP’s complete dependence.

Why does all that matter?

Because Quadrant made it matter.

This beating around the bush and fantasy about an arms-length supplier-customer relationship with Zhijian/Foresee, as if Quadrant ever had had a choice and pretending that there is what is not, this is, what creates this unfortunate hoo-ha.

Possible and likely feasible is, what Quadrant already claim to be doing: Import magnet blanks from their parent in China, customise them and sell them on.

Why was there a need for this announcement anyway?

In any case, we find the set-up incoherent. Rolling the drums a bit and touching things up is always permissible (and expected), but our impression is, that there is by far not the substance that one would have expected at face value.

As an l-size industrial customer we would have serious concerns, as this is not a consolidated group that packs a punch, but rather a patchwork of companies and real estate investments, who happen to have only one thing in common: The same ultimate controller and landlord.

Rationale of investing in US-magnets

We were going to give you a long explanation, why it would make perfect sense for a Chinese magnet maker to get on the ground in USA.

However, at no point Quadrant explicitly say that they are going to make the metal and sinter magnets in Louisville. It could well be an extension of the existing import and customisation.

To be fair, this is a trail-blazer undertaking, so keeping all options open would be sensible for Quadrant.

An evil plot for world domination?

There is the suggestion of potential involvement of China’s government, either supportive or destructive, depending on who you talk to, and the US-government should intervene in either case.

This does not hold water.

First of all, this structure that Mr. Sun, Mr. Wang, Messrs. Moore and Zoglmann present to us here is not what the Chinese government would ever want to be related to, not even remotely. If there was a government conspiracy, it would be much, much smarter and fully comply with Moscow Rules.

Then, there is no restriction on Chinese rare earth magnet companies to invest abroad. To the best of our in-depth research, there is no restriction on export of the relevant equipment from China either.

Any capital injection from China to the US, however, will require a pass from the China State Administration of Foreign Exchange (“SAFE”) - that is a real risk, as the RMB is not freely convertible and every single corporate foreign exchange remittance is being scrutinised.

China’s extremely flexible National Security Law provides the means to ban export of even tomato ketchup on grounds of national security, if deemed necessary.

But here we challenge you again: When has the Government of the People’s Republic of China ever required a law to do whatever it deemed necessary?

And as far as the US government is concerned:

Noteworthy

The chairman of newly founded China Rare Earth Group, Ao Hong, was recently quoted, that he wants to

…deepen and expand the global layout of the rare earth industry and international exchanges and cooperation.”

He is parroting the call of China’s Minister of Industry & Information Technology for international cooperation.

Our take: If China does not manage to internationalise its rare earth and permanent magnet business, it may well get stuck in a dead-end street. But carbon-neutral will have to be binned then.

China funds flee from the rare earth sector

The actual controller of Minmetals Rare Earth will be changed to China Rare Earth Group, whose share price has fallen more than 30% in the past month

The announcement shows that Minmetals Co., Ltd. will hold 16.1% of the shares of Minmetals Rare Earth , and Minmetals Nonferrous Metals will hold 23.98% of the company's shares of Minmetals Rare Earth Group Co., Ltd. (hereinafter referred to as " Minmetals Rare Earth Group"). ) 100% of the equity was transferred to China Rare Earth Group for free, resulting in China Rare Earth Group directly and indirectly holding 40.08% of the shares of Minmetals Rare Earth.
After the transfer is completed, the controlling shareholder of Minmetals Rare Earth is still Minmetals Rare Earth Group, and the actual controller is changed from China Minmetals to China Rare Earth Group.
In addition, China Minmetals also holds an 8.6% stake in Xiamen Tungsten.
However, it is worth noting that although the soaring rare earth prices in 2021 have drawn attention to the track, the stock price has continued to decline recently.
Taking the share price of Minmetals Rare Earth as an example, since the beginning of 2021, the stock has risen by 135.79%, with a peak of 341.31% during the period, but the share price of Minmetals Rare Earth has dropped by more than 30% in the past month. To receive 32.02 yuan / share.
In addition, leading stocks such as Northern Rare Earth , Baotou Steel Co. , Ltd., and Xiamen Tungsten Industry also performed similarly.
Some analysts believe that perhaps because expectations and valuations are too high, and the performance disclosure window is approaching, funds have become more cautious, and they are worried that performance will fall short of expectations. Since December 2021, funds have continued to flee from the rare earth sector, and the cumulative withdrawal rate of the rare earth index has reached 18.7%.
However, in the Hong Kong stock market, the rare earth concept sector has rebounded slightly recently. According to the latest data, the rare earth sector of Hong Kong stocks rose on January 20, Xinjiang Xinxin Mining rose 8.5%, Minmetals Resources rose nearly 7%, and Jiangxi Copper shares rose.
From an industrial point of view, the popularity of the new energy track last year quickly boosted the demand for rare earth materials, especially high-performance NdFeB, causing the price of rare earths to soar. Since May 2020, rare earth prices have started a new round of rising prices, and the prices of mainstream rare earth products such as praseodymium neodymium, terbium, and dysprosium have all hit new highs in the past 10 years in 2021.
CICC believes that supply and demand in the rare earth industry continue to tighten. The downstream industry of rare earth continues to develop rapidly, and NdFeB magnetic material enterprises continue to expand production, forming demand support. However, it is difficult for the supply of rare earths to have a large increase in the short term, and the supply is relatively rigid. It is expected that the current tightening of rare earth supply and demand is expected to continue for 3 to 5 years.
Industry insiders said that China Rare Earth Group mainly focuses on medium and heavy rare earths, and will form a pattern of two heroes in the north and south with China Northern Rare Earth Group, which focuses on light rare earths. The bargaining power of rare earths has been significantly improved, and the long-term logic of the supply side has been further optimized. In the long run, the rare earth industry is at a new starting point for the reshaping of supply and demand, and the valuation system is restructured.

Stock Market

Ex-China rare earth stocks did not fare so well during the first weeks of 2022:

China’s listed rare earth companies also saw declines:

Last, but not least, China rare earth magnets:

By the way: China’s import dependencies in non-ferrous

Bumper year-end for Chinese offshore wind as feed-in tariff expires

Several gigawatts of offshore wind capacity were added to the Chinese grid in the final weeks of 2021 to beat the announced scrapping of feed-in tariffs, according to Windpower Intelligence, the data and research division of Windpower Monthly.
Windpower Intelligence identified ten newly online 300MW-plus Chinese offshore wind farms in December. Together, they have a combined capacity of nearly 3.5GW, confirming industry predictions that there would be a rush to get projects commissioned before the expiry of government support.

Meanwhile, on Twitter:

Simon Evans @DrSimEvans

Wow – China just built more offshore wind capacity, in 2021 alone, than the rest of the world had managed in the last 5yrs put together Its 26GW now accounts for half of the world's 54GW total Also, it added twice as much in 2021 as IEA had forecast in…December 2021

Block Island is Solyndra all over again—except this time, wasted tax dollars won’t be the only consequence. This problematic project, and others in the works like the Vineyard Wind project off the coast of Rhode Island, threaten to destroy the U.S. fishing industry, raise already high energy costs, and threaten precious endangered wildlife that only exist in the region.
So much for “going green.”
Of the Block Island farm’s five turbines, the latest eyewitness reports are that only one was functional. In the summer of 2021, the turbines were shut down after General Electric noticed stress fractures in the turbines. Though the shutdown was labeled “routine maintenance,” given that most wind turbines only last 20 to 25 years anyway, the nation’s first offshore wind farm has an unimpressive track record. Meanwhile, Block Island residents have enjoyed continued access to electricity thanks to a connection to the mainland or back-up diesel generators.
A longer running problem is the transmission lines, which came unburied from the seabed starting in 2017, exposed by the waves just months after installation, creating a significant safety hazard and costing tens of millions of dollars to repair.
Of course, humans will suffer from these projects, too. Every significant expansion of wind and solar power in global history has led to a sharp increase in the cost of electricity—and made that electricity less reliable.
Germany, for example, brands itself the world’s leader in the energy transition. But their Energiewende has been a near-total failure. After 20 years, fossil fuels still provide 78 percent of the country’s energy, and a significant portion of its so-called renewable electric generation comes from biomass, or burning wood, which produces significant air pollution and more carbon dioxide emissions than coal. Meanwhile, Germans are paying the highest electricity prices in Europe.

Epoch Times is a publication of the Falungong cult. Originating in China, erstwhile having had around 70 million members, Falungong got banned after laying siege on the seat of China’s government, Zhongnanhai, adjacent to the Forbidden City in Beijing in April, 1999. Ever since the exiled cult leadership has been publishing anti-China propaganda from abroad, more driven by hatred, less by fact.

Handle with care.

The following article is rather long, but it is thoroughly worth reading, as substantially free of hype, a rarity in rare earth these days. We have shortened it for you:

Gao Fengping, a rare earth expert: Resource-based enterprises should do a good job in their own environmental pollution control, and mid- and downstream enterprises should use technology research and development to help resource-based cities carry out incremental transformation

"I'm fine, just add some rare earths." Gao Fengping, a professor at Inner Mongolia University of Science and Technology and a rare earth expert, told reporters in an interview that experts in the rare earth industry like to say this. Sometimes no matter what the material, adding a little rare earth, the performance of the material will immediately become different. For example, ordinary steel, as long as a little rare earth is added, the hardness, flexibility, heat resistance and other capabilities will be significantly changed.
Gao Fengping believes that the establishment of China Rare Earth Group is because the previous integration of the six major rare earth groups has not been as effective as expected, and the environmental pollution problems caused by the early rare earth mining have not been well resolved. China Rare Earth Group will take responsibility for the pollution caused by rare earth mining. Among them, China Minmetals will play more roles in environmental governance.
In addition to Aluminum Corporation of China, Ganzhou Rare Earth and China Minmetals, Youyan Technology Group Co., Ltd. and China Steel Research Technology Group Co., Ltd. also hold 3.9% of the shares of China Rare Earth Group respectively. Gao Fengping said: "Although they have a relatively small shareholding, these two companies are not necessarily 'supporting actors'. They have a lot of application-oriented companies and have been very successful in rare earth applications. So I think there will be an industrial chain in China's rare earth group. The division of labor, some are resource development, and some are application-oriented.”
Rare earth prices have been rising from June last year until the beginning of this year. In November last year, the market believed that rare earth prices had returned to record highs. Gao Fengping said that the moderate increase in rare earth prices is conducive to the rational distribution of the industrial chain and value chain. At the same time, the rise of upstream raw materials will also eliminate downstream enterprises that are not technologically competitive.
Gao Fengping also told reporters that the current resource-based cities [mining towns] are facing the problem of transformation, and 61% of the city-level resource-based cities' population is declining. For example, Baotou City, as the capital of rare earths, has also faced problems such as the loss of young talents in recent years. In addition to resource protection and environmental governance, resource-based companies also need to help their cities to transform their industries.
In the early days, there was a relatively serious mining chaos in the domestic rare earth industry. In order to better manage the mining and smelting separation of rare earths, six major rare earth groups have been established in China after a series of integrations. Every year, the Ministry of Industry and Information Technology and the Ministry of Natural Resources will issue the total control indicators of rare earth mining, smelting and separation for the year in batches, and all the indicators will be distributed to the six major rare earth groups. The six major groups include China Rare Earth Co., Ltd., Minmetals Rare Earth Group Co., Ltd., Northern Rare Earth (600111.SH), Xiamen Tungsten Industry (600549.SH), China Southern Rare Earth Group Co., Ltd., and Guangdong Rare Earth Industry Group Co., Ltd.
According to Gao Fengping, after the establishment of the six major rare earth groups, the rare earth industry still experienced a situation of "out of control" in 2018. In 2019, the Ministry of Industry and Information Technology and 12 ministries including the Ministry of Public Security jointly issued a document for investigation and punishment. At the beginning of 2021, the Ministry of Industry and Information Technology issued the "Regulations on the Management of Rare Earths (Draft for Comment)", which was included in the legislative work plan by the State Council in July.
According to the rare earth mining indicators announced in recent years, it was 105,000 tons in 2017, 120,000 tons in 2018, 132,000 tons in 2019, 140,000 tons in 2020, and 168,000 tons last year. This year’s indicators have not yet been announced [they have, see above]. Gao Fengping said that in 2018, some companies even dug out old slag, cross-border mining, mining and smelting separation, and the implementation was very poor, so there was a joint thorough investigation by multiple ministries and commissions later. In this context, the major groups in 2020 and 2021 will still be able to meet the standards in terms of performance indicators.
On December 20, Chang Guowu, deputy director of the Department of Raw Materials Industry of the Ministry of Industry and Information Technology, stated at the 13th China Baotou Rare Earth Industry Forum that "the right to rare earth exploration and mining rights should be released in an appropriate and orderly manner, and increased efforts to monitor the Bayan Obo Mine and the The exploration of medium and heavy rare earth resources is necessary to find out the resource reserves." Gao Fengping told reporters that according to Baotou Steel Group's exploration, Bayan Obo Mine not only has light rare earths, but also has a considerable proportion of medium and heavy rare earths. Inner Mongolia University of Science and Technology also has a national key laboratory to study the comprehensive utilisation of the Bayan Obo mine. In addition to rare earths, the associated ore of Bayan Obo also has various mineral resources such as iron, niobium, thorium, and manganese. Mine should be comprehensively utilised, but must adhere to protective development.
Gao Fengping believes that another reason for the establishment of China Rare Earth Group is that the environmental problems of rare earth mining have not been properly dealt with, especially the pollution caused by the mining of ionic rare earth mines in Ganzhou. Previously, the Central Leading Group for the Rectification of Ecological and Environmental Protection Inspectors was stationed in Jiangxi, and also released a warning film about the ecological environment of the Yangtze River Economic Belt. Pollution control includes not only the existing pollution, but also the new pollution that is continuously generated in the current production. The ionic rare earths in the south are particularly prone to soil and water pollution during the production process.
Ionic rare earths are rare earth elements adsorbed on minerals in the form of ions. The rare earths in Jiangxi, Guangdong and other places in China are mainly ionic rare earths. Rare earths are divided into light rare earths and medium and heavy rare earths. The main production in southern China is mainly ionic medium and heavy rare earths.
According to the rare earth mining, smelting and separation indicators in 2021, the three main companies that make up the China Rare Earth Group (Chalco, Ganzhou Rare Earth and China Minmetals) have a total of about 68.4% of the domestic mining indicators of medium and heavy rare earth products, and 32.6% of the domestic rare earth products. Indicators for light rare earth mining. Therefore, the market generally believes that the main goal of the integration of China Rare Earth Group is to protect the medium and heavy rare earth resources in the southern region.
Gao Fengping believes that although Chinalco, Ganzhou Rare Earth and China Minmetals all hold 20.33% of the shares in China Rare Earth Group, the importance of these three companies in the new state-owned enterprises may not be exactly the same. China Minmetals will play a greater role in resource protection and environmental governance.
"The State Council's environmental governance and rectification of China Minmetals is relatively recognised. According to the announcement in November last year, of the 48 rectification tasks set out by the Central Ecological Environmental Protection Inspection Team to China Minmetals, China Minmetals has completed 41 The Ministry of Ecology and Environment said: "The company's ecological environment has improved significantly, and the synergistic benefits of ecological and environmental protection governance and the promotion of high-quality development have emerged," said Gao Fengping.
The above-mentioned Minmetals rare earth person told reporters that the company has not carried out its own rare earth mining, but purchased rare earth raw materials from the parent company Minmetals Rare Earth Group Co., Ltd. and other channels, and then separated and processed to produce high-purity rare earth oxides, etc. product. However, the company owns 42% of the exploration rights of Shenggongzhai Rare Earth and Feitian Rare Earth mines, and is currently in the process of “exploration and mining”.
Minmetals Rare Earth stated in last year's semi-annual report: "The company's overall level of energy conservation and environmental protection continues to be among the best. The chemical oxygen demand, ammonia nitrogen content and other pollutant discharge indicators in the wastewater of production enterprises have been well controlled, and they have well reached the national level. The control requirements of the Ministry of Ecology and Environment's "Rare Earth Industry Pollution Discharge Standards"."
"Currently, resource-based companies must complete green governance in the process of development, and China Rare Earth Group should take great responsibility for environmental governance. Taking Ganzhou as an example, China Rare Earth Group will take over this responsibility from Ganzhou Rare Earth. It is our responsibility to fulfill the task of mine pollution control." Gao Fengping said.
Gao Fengping also told reporters that after the reorganization, Xiamen Tungsten Industry, Guangsheng Rare Earth [a.k.a. Guangdong Rising Nonferrous Metals], etc., their production of heavy rare earth accounted for about one third of the market share, and the market will play an important role to a certain extent.
If the distribution ratio of the industrial chain is very unfavourable to upstream resource companies, front-end resource-based companies cannot spend money to manage the environment. "We hope that resources will be priced reasonably. Environmental governance cannot be entirely paid for by the state's transfers, because this is a very large sum of money." Gao Fengping said. The Ministry of Industry and Information Technology once estimated the treatment cost of rare earth mines in Ganzhou at [RMB] 38 billion. If the price of resources continues to decline, experience shows that the companies fail to implement the mine environmental management.

Lithium Prices Surge on EV Demand from China

Amid growing conviction on the bright future of electric vehicles (EVs), the scramble for battery metals like lithium is just beginning.
By the first week of 2022, prices for lithium carbonate, a key ingredient in lithium iron phosphate (LFP) batteries, reached a new high of 300,000 yuan or nearly $47,500 per ton in China.
Source: elements.visualcapitalist.com Lithium Prices Surge on EV Demand from China

We can’t envision a happy ending to this.

Abandoning Net Zero Carbon?

Looking at what McKinsey came up with, abandoning net zero carbon is not an unlikely suggestion.

Cost: US$ 275 trillion until 2050, not including rare earth, of course, as we all know rare earths will miraculously precipitate from thin air:

Source: THE NET-ZERO TRANSITION: WHAT IT WOULD COST, WHAT IT COULD BRING - McKinsey & Co.

This here is probably the single most interesting rare earth paper in recent memory, compiled by Per Kalvig of the National Geological Survey of Denmark and Greenland (GEUS):

Rare earth metals (REE) Occurrences, processing, consumption, supply and expectations - Per Kalvig

If you really want to know something about rare earth magnets, written in plain language for mere mortals, this is what you will want to read:

Available from Elsevier, here.

//Companies

Rainbow Rare Earths cements 70% share in Phalaborwa project

When the joint venture (JV) was announced in November 2020, a mechanism was included in the agreement to enable for Rainbow’s JV ownership to vary from 60% to 85%, dependent on the results of a prefeasibility study.
The amended agreement, signed on January 18, confirms Rainbow’s shareholding in the JV at 70%, with the remaining 30% held by Bosveld.

ASM’s rare earth processing & separation concepts

Korean Consortium successfully completes due diligence on the Dubbo Project

Australian Strategic Materials Limited (ASM or the Company) (ASX: ASM) is pleased to advise that the consortium of South Korean Investors, comprising Cerritos Holdings Co., Ltd, Kamur Partners LLC and ACE Equity Partners LLC, (the Investing Partnership) has successfully completed due diligence on the Company’s flagship Dubbo Project. This represents a key milestone in progressing with the consortium fund’s proposed conditional investment under the Framework Agreement. (see ASX Announcement: 21 July 2021).

The announcement of July 21, 2021 was:

ASM signs $US250m framework agreement with South Korean consortium for 20% in Dubbo Project and offtake from Korean Metals Plant

Australian Strategic Materials Ltd (ASX: ASM or the Company) has entered into a conditional exclusive framework agreement (Agreement) with a consortium of South Korean Investors to subscribe for a 20% equity interest in Australian Strategic Materials (Holdings) Ltd (ASMH) for a subscription price of US$250m (equivalent to AU$340m based on current exchange rates) (Proposed Transaction). ASMH is a wholly owned subsidiary of ASM and is the holding company for ASM’s Dubbo Project.
The Agreement includes provision for a ten-year offtake agreement for up to 2,800tpa of NdFeB (neodymium-iron-boron) alloy from ASM’s Korean Metals Plant (KMP), which is currently under construction in Ochang, South Korea (Proposed Offtake Agreement). The volumes outlined in the Proposed Offtake Agreement anticipate 100% of the neodymium oxide planned to be produced at the Dubbo Project being the primary source of feed to the KMP post the completion of construction.

On the processing and separation concept for Dubbo, ASM keep us guessing:

Source: Alkane presentation at Metal Events 16th International Rare Earth Conference Kuala Lumpur 5-8 November 2019

Off-site?

What does off-site mean: Third party, we think.

Originally planned at Alkane-times was to ship the La/Ce-depleted concentrate to China’s Shenghe Resources 90%-owned Vietnam Rare Earth. However, according to our findings, the capacity there is not big enough for turning out the currently aspired volume.

Even if the capacity was there, nowadays rare earth oxide prices are booming, the material is short, and perhaps the motivation for cheap toll-processing to fill up capacity is no longer so high.

Or on-site?

On their website under the “Process”-link ASM advertise something, that the unsuspecting reader would guess is full on-site separation of rare earth, 25 km south of Dubbo.

On closer inspection, however, the text does not explicitly say that.

Or both, off- and on-site?

In its release “Dubbo Project Optimisation Delivers Strong Financials” of December 7, 2021 (CAPEX at whopping AU$ 1.6 billion, up ~30%, OPEX down ~10%) ASM refer to Alkane’s ASX Release 4 June 18 Dubbo Project Engineering and Financials Update, which envisions partial on-site separation of the magnetic materials:

Source: Alkane ASX and media release “Dubbo Project: Status” of June 4, 2018

Sold on the market = China must take it, else there is none.

And the release mentions, this time without yttrium:

Source: ASM ASX and media release “Dubbo Project Optimisation Delivers Strong Financials” of December 7, 2021

So how is this cherry-picking going to work?

Perhaps with this one: Separation of rare earths using solvent extraction consisting of three phases?

NSW Uranium Ban

On-site separation, wether partial of full, would incur an unwanted by-product: Uranium. The Dubbo Project is estimated to contain 35,000 t of thorium and 4,200 t of uranium.

Data source: Alkane Resources corporate presentations from 2011-2019

In NSW, where Dubbo is located, Uranium mining and production has been banned since 1986.

1.5 years ago there was a motion to end NSW’s ban on uranium production, however, the motion was culled and the ban on uranium is still in force.

No Secret

The previous management Alkane never really denied the issue or made outlandish claims over miracle processes leading to complete evaporation of radionuclides.

Our view

This proportional 1% of uranium is probably preventing the other 99% from happening.

The variety of processing concepts is quite possibly related to various ideas, how to deal with the thorium and uranium contents of Dubbo.

Previously staunchly anti-China Alkane’s, and now ASM’s overall concept will not fly at all without China:

As a raw material supplier to the Korean metal factory (where ASM will have zero function, unless it can supply home-made, on-spec, high pure rare earth oxides)
As an outlet for non-processed concentrates, as well as finished niobium, hafnium and zirconium, whether directly or through off-takers.

ASM’s Comment

ASM did not respond to an e-mail seeking comment.

Prices

China is still closed for Spring Festival Holidays, we’ll update you next time.

Thanks for reading and have a wonderful week ahead.