RE Prices: Contraction of Upstream Supply; Peak Play Foul; A Look at Rainbow;

Rare Earth 2020 December 1

The rare earth price development during the past month:

It is too early to say, if prices will hold on this level, but it may just work, especially since upstream raw material is the source of the problem.

For the heavy rare earths China Southern issued a new price list yesterday, increasing quotations for gadolinium, terbium, dysprosium and holmium oxide.

Here the longer term view:

Big question is now, if EV makers will digest the corresponding price increases for permanent magnets.


“Corruption isn’t a natural disaster: it is the cold, calculated theft of opportunity from the men, women and children who are least able to protect themselves.”

(David Nussbaum, Transparency International)


Peak Resources, whose fate desperately depends on getting a Tanzanian rare earth deposit licensed by the Tanzania government, announced on November 9 that a Tanzanian national named Abdullah Mwinyi has joined Peak’s board of directors.

Abdullah Mwinyi, apart from chairing of Swala Oil and Gas (Tanzania) plc., is a former member of Tanzania’s parliament and chaired the Legal, Privileges and Rules Committee of the East African Legislative Assembly until 2017.

Abdullah Mwinyi is the son of former Tanzanian president Ali Hassan Mwinyi (95), who fathered 12 children.

Another son of Ali Hassan Mwinyi, Hussein Mwinyi, currently serving as Tanzanian Minister of Defense , who has been a sitting member of Tanzania’s parliament since 2000, was just elected president of Zanzibar, a semi-autonomous region of Tanzania last month.

As president of Zanzibar, Hussein Mwinyi will be the third highest ranking person in the Tanzanian government, just behind the president and the vice president.

Peak Resources’ chairman Tony Pearson announced the appointment of Abdullah Mwinyi to Peak’s board precisely one week after Abdullah’s brother, Zanzibar’s new president, was sworn into office.

In some countries it rarely is, but this may all be purely coincidental, especially since there are 11 siblings who possibly - probably thanks to their father being a former president - may all be holding some form of public office and Tanzania ranking 96 of 180 countries on Transparency International’s Corruption Perceptions Index should be of no concern at all.

Or should it?

In terms of compliance, Peak’s newly appointed director fits the definition of a politically exposed person as referred to by AUSTRAC and of a senior foreign political figure as in the Foreign Corrupt Practises Act, which is applicable worldwide and specifically applies to stock-listed companies.


Staying in Africa, to show you how hard it is, there are Rainbow Rare Earths with their Burundi project. They just published their annual report.

According to the report, main shareholders holding 33.1% of the company shares are related parties: Rainbow’s chairman, Rainbow’s CEO and a Robert Krampf.

During the financial year ending June 30, 2020, Rainbow had issued a staggering 205,642,551 new shares, an increase of the number of shares by whopping 95%, while the stock price moved from 3.8 p on July 1, 2019 to 2.95 p on June 30, 2020, a decrease of only 22%.

The TREO values of the Gakara area are exceptionally high, however, the devil lives in the detail. Page 5 of the annual report shows this material composition, which possibly bases on averages from the “Technical Report on the Gakara REE Project” of MSA Consultants, dating June 4, 2019:

It is 78% of cheap and oversupplied lanthanum and cerium, which is no surprise, given that the area was historically mined for just these two, plus 19% neodymium and praseodymium, a.k.a. NdPr.

The a.m. is somewhat comparable to Mountain Pass bastnaesite, 82% lanthanum and cerium and 17% of NdPr.

The annual report values the tiny stock Rainbow hold at US$ 1.70/kg, reasonable, but can’t cover cost, whereas MP achieve for their concentrate ~US$ 1.63/kg and are profitable. See Rainbow’s 2019 annual report, page 12:

Excluding freight cost, Rainbow sold in 2018 a t loss of US$175/t and that loss swelled to US$2,255/t in H1 2019. “Production costs of US$3.1 million included US$0.6 million of plant costs, US$1.4 million of mining costs, and US$1.1 million of local support costs”, the 2019 annual report says.

Rainbow’s transport cost are also unfavourable.

From Rainbow’s Gakara is about 1,000 miles across the border to Port Dar Es Salam in Tanzania and about 1,200 miles across the border to Kenya’s Port Mombasa. Both routes offer less than ideal conditions. Also during rainy season, the access to the mining sites is inhibited.

While MP have road infrastructure, it takes 4 hours of smooth ride from Mountain Pass to Port Long Beach (~260 miles), and MP probably pay around US$20-25/t freight cost, Rainbow’s freight cost are US$ 300+/t (even 3-4 times higher than in EU for comparable distances).

Royalties at Rainbow were excessive and the annual report talks about clawing back about US$ 300,000 in “overpaid” royalties.

The road ahead: According to the annual report 2020 Rainbow aim to turn out 5,000 t of concentrate per year (@US$1.70/kg that is US$8.5 mio) in the first stage, which they are currently selling at a 70% discount to oxide prices. Rainbow envision to reduce the discount and increase the production for reaching economies of scale.

The strip ratio has been reduced by 90%. And more improvements in the pipeline.

During financial year 2021 Rainbow has to further issue shares to generate ca. US$ 5.5 mio.

Overall, we’d hope to see, if Rainbow can reduce their cost so to potentially break-even, when selling at competitor MP’s prices.


Thanks for reading and have a good rest of the week!

//Market

Rare earth is crazy again! The price index has risen by 17% monthly. Can the "Export Control Law" have an effect soon?

Rare earth prices are entering a rising channel.

According to the Rare Earth Sector Index of the Business Society, the Rare Earth Index on November 25 was 413 points, an increase of 9 points from the previous day, and a decrease of 58.70% from the highest point in the cycle of 1,000 points (December 6, 2011), compared with 2015. On September 13, the lowest point of 271 points increased by 52.40%. (Period refers to 2011-12-01 to present).

Rare earth prices have gradually increased since late October. From 353 points on October 27th to 413 points today, the overall increase in one month is as high as 17%. Recently, the rare earth market fluctuates frequently, and the market prices are rising day by day.

Unlike policies and unexpected factors in previous years that caused rare earth prices to rise, this year, affected by health incidents, demand for rare earths dropped sharply in the first half of the year. In the second half of the year, demand for rare earths rebounded and there was a supply gap. Now a new high. With the countdown of the "Export Control Law of the People's Republic of China" (hereinafter referred to as "Export Control Law") officially coming into effect on December 1, will China Rare Earth( 0.445 , -0.01 , -2.20% ) usher in a strong rise? What about motivation?

"The price is not rational"

According to the data from the business agency, China's rare earth index has risen sharply. The price of domestic light rare earth praseodymium and neodymium series has skyrocketed. The price of neodymium praseodymium oxide rose by 47,500 yuan/ton to 470,000 yuan/ton, and the price of neodymium praseodymium metal rose by 42,500 yuan/ton. To 570,000 yuan/ton, the price of praseodymium oxide was 330,500 yuan/ton, the price of neodymium oxide was 462,500 yuan/ton, the price of metal praseodymium was 615,000 yuan/ton, the price of neodymium metal increased by 35,000 yuan/ton to 602,500 yuan /Ton.

In terms of heavy rare earths, the price of dysprosium in the domestic heavy rare earth market has risen recently, and the price of terbium has risen sharply. Holders are reluctant to sell them. Imports in Myanmar are still blocked. The domestic rare earth market prices may continue to rise in the later period.

In an interview with the China Times reporter, Baichuan Yingfu Rare Earth analyst Du Shuibing said, “The price of rare earths has risen sharply since October, mainly due to the rapid rise in downstream demand. From the end of the second quarter to the third quarter, downstream demand is good. The output of energy vehicles has increased significantly, coupled with the rapid development of terminal industries such as wind power and electronic products. As health incidents slow down, demand may continue to pick up, and the demand for neodymium iron boron continues to increase; but the growth rate on the supply side is slow, and there is a supply gap. As a result, the price of the domestic neodymium market has risen wildly. In November, the price of rare earths has been emotionally exploded, but the price is not rational, and the price has returned in the past two days."

In fact, as early as January 2011, rare earth prices have also experienced a crazy skyrocket. According to the price monitoring of the business agency, in 2011, the highest increase of dysprosium oxide was 823.61%, and the highest increase of dysprosium-iron alloy was 806.90%. However, entering the middle and late July of that year, rare earth products generally declined. The prices of some products fell to the prices in early May. As of the end of December of that year, dysprosium oxide fell by 53.38%, and neodymium oxide fell by 48.47% compared to the highest point in July.

In this regard, Du Shuaibing told reporters that the sharp increase in rare earth prices in 2011 was mainly related to policies. In that year, the country increased the control policies and rectification of the rare earth industry and achieved significant results, such as raising the tax on rare earth resources and issuing the "Regarding Promoting the Sustainable Health of the Rare Earth Industry" "Several Opinions on Development" confirms the strategic position of rare earth resources. Local governments have increased their control over the source of rare earth resources, and key rare earth enterprises have strengthened the management and rectification of resources, production, and prices.

"In the past two years, downstream application demand has exploded, relying on demand to support price increases. The most important demand for rare earth is the rare earth permanent magnet industry. In the past ten years, global rare earth NdFeB production has increased from 120,000 tons to the current annual output of 250,000 tons. In the next five years, the output of rare-earth permanent magnets may double to 500,000 tons [output, or rather capacity?]. Among them, the growth rate of new energy vehicles, the layout of the wind power industry, and the consumption changes of electronic products, etc., have a significant impact on rare-earth permanent magnets. Support.” Du Shuibing also told reporters that the price of rare earths in 2011 was a roller coaster, rising rapidly and falling rapidly, but this year is a stepped increase, there is a callback during the rise, and the downstream market is gradually digesting it.

How long can the rise last?

Rare earths are now in the limelight, and the upward trend will continue to attract attention. With the official entry into force of the "Export Control Law of the People's Republic of China" on December 1, will rare earth prices add fire?

Du Shuibing believes that the "Export Control Law" has little significance in promoting the price increase of rare earths. It is not clear whether rare earths are included in the control list. The "Export Control Law" does not mean that exports are restricted.

According to data from the General Administration of Customs, from January to October this year, my country exported 28,700 tons of rare earths overseas, a decrease of 28.4% from the same period last year.

However, as we all know, China is a big exporter of rare earths, but according to the reporter’s understanding, due to domestic remediation, continuous crackdown on black rare earths and shrinking industry supply, China’s imports of rare earth materials from abroad have gradually increased. Light rare earths are mainly imported from Australia [Lynas] and the United States [MP Materials], and heavy rare earths are mainly imported from Australia [Northern Minerals] and the United States [Southern Ionics] plus imports from Myanmar [Minmetals].

A person from a downstream permanent magnet material company told the China Times reporter that related American companies sell concentrates containing rare earth oxides to China. If China's light rare earth prices increase, related American companies will also make money, thereby extending the industrial chain for oxidation. For materials and metals, the quotas for light rare earths are expected to increase substantially next year. China has a large amount of light rare earths and low cost, which has great advantages. If the quota increases, the prices of young rare earths may be adjusted.

"From the current orders and demand, the rising trend of rare earth prices may continue until the first quarter of next year," Du Shuibing also said, "MIIT rare earth quotas are likely to increase, but the increase is limited. If demand continues to erupt, rare earths Supply is still tight and will support rare earth prices.” (Edit: mz)

Rare earth prices hit new highs and strategic value continues to increase

Recently, the price of many rare earth spot varieties hit new highs. Moreover, the price of terbium oxide has hit a new 8-year high, and the prices of neodymium praseodymium oxide and NdPr have reached a new 3-year high. At the same time, some companies are actively investing in related rare earth projects. According to industry sources, the contraction of upstream supply remains unchanged, and rare earth prices are expected to continue to rise. 

Comment: He, who can ship concentrate to China, shall profit.

Export control law to affect rare earths, UAVs

The law, passed by the country's top legislative body in October, stipulates that China will impose restrictions or bans on exports of military and nuclear products, as well as other goods, to protect the national interest and security. Technologies, services and data related to the controlled items will also be affected. 

The government has not elaborated on what specific items or technologies will be restricted. [Yes, it has: Export of rare earth production know-how ban of 2001 is incorporated]

Although the actual impact of the new law on China's exports is yet to become clear, it has already sent ripples through certain industries, such as inflating rare-earth prices, as the market reads the measure as a sign that China will restrict rare-earth exports to the US [in such case, domestic prices should drop like a stone, particulary La and Ce]. Traditionally, the US has been reliant upon importing rare earths, which can be used to produce weapons like tanks and missiles, from China.

Comment: Clearly someone at work who neither read the law, nor has he the remotest clue about rare earth. This article did not appear in the Chinese language version of Global Times.

//Politics

Notice of the General Office of the State Council on Issuing the New Energy Automobile Industry Development Plan (2021-2035)

State Council Fa (2020) No. 39

Chapter VI Improving the Infrastructure System

Section 3 Orderly promote the construction of hydrogen fuel supply system

Improve the economy of hydrogen fuel production, storage and transportation. Carry out the application of industrial by-product hydrogen and renewable energy hydrogen production technology according to local conditions, and accelerate the industrialisation of advanced and applicable hydrogen storage materials. Carry out demonstration applications of storage and transportation technologies in various forms such as high-pressure gas, cryogenic gas, low-temperature liquid and solid, explore the construction of hydrogen fuel transportation pipelines, and gradually reduce hydrogen fuel storage and transportation costs. Improve the standard system for hydrogen fuel production, storage, transportation, and filling. Strengthen hydrogen fuel safety research and strengthen safety supervision of the entire chain.

Comment: Hydrogen fuel cells are to widely replace lithium-ion batteries in China. There is simply not enough Li on Planet Earth for supporting a sustained increase of EV mobility. Apart from that, hydrogen fuel cells substantially increase consumption of rare earth problem child lanthanum.

By the way, at the time of this writing there are only 15 compliant lithium-ion battery manufacturers in China.

Govt plans massive sectoral reforms to promote business in tribal districts

Similarly, Khyber tribal district is rich in marble, barite, graphite, soapstone, limestone, oil, gas and bastnaesite (rare earth mineral) and Orakzai region has coal, iron ore and oil and gas while Kurram belt has soapstone, coal, marble, magnesite, iron ore, lead, oil and gas.

Comment: A very long shot in a tribal area, that is home to fundamentalists and other radicals.

Malawi’s transformation under Chakwera: More governance, less power

Chakwera has gone further, addressing governance and regulatory issues that have kept investor confidence at bay since independence. He began with the mining sector: one that has underperformed for a generation, yet one that represents a crucial key for unlocking Malawi’s wider potential.

In a web conference last month organised by Invest Africa US, President Chakwera laid out his vision for the mining industry, noting his goal to raise the contribution of extractives from the current 1% of GDP to close to 30%.

A recent geological survey has revealed that this is possible – and Malawi is far richer in mineral resources than previously thought along with significant deposits of uranium, bauxite, iron ore, alluvial gold, coal, graphite, gemstones and rare earth metals [Mkango].

Chakwera’s first step is professional and official licensing – combined with a crackdown on uncontrolled practices decades-long of turning the other way while foreign licence owners export minerals illegally under the guise of sending “samples”.

He pointed to international reports that show how Malawi exports around $85m in gold to the Middle East every year – but no-one is able to say who is exporting the gold or where it is mined.

In response to this ailing industry, the Chakwera administration has swiftly established a Ministry of Mines – a government body that did not previously exist in Malawi – as an important first step to boost investment and combat illegal mining.

//Science

Physicists Observe Trippy 'Vortex Rings' in a Magnetic Material For The First Time

Wherever you have fluid, there you can also find vortex rings.

Now, scientists have found vortex rings somewhere fascinating - inside a tiny pillar made of a magnetic material, the gadolinium-cobalt intermetallic compound GdCo2.

The new discovery is the first time vortex rings have been identified in a magnetic material, confirming a decades-old prediction - and it could help scientists identify even more complex magnetic structures that could be harnessed to develop new technologies.

Magnetic ring vortices were predicted over 20 years ago in 1998, when physicist Nigel Cooper of the University of Cambridge demonstrated magnetic vortices are analogous to the vortex rings seen in fluid dynamics. Actually finding them, however, was a lot harder to do.

On-chip erbium-doped lithium niobate microcavity laser

Recently, researchers from Shanghai Jiao Tong University publicly reported for the first time that they designed, fabricated, and realized the laser output of a microcavity on a lithium niobate chip on a self-developed erbium-doped LNOI.

The whispering gallery mode microdisk resonator has a small size and high quality factor. By selecting a suitable pump source and designing and fabricating the LNOI microdisk carefully, the integrated lithium niobate on-chip C-band lasers output has been achieved.

//Companies

Mkango Announces Grant-Funded Project to Develop Rare Earth Recycling for Loudspeakers

Mkango Resources Ltd. is pleased to announce that HyProMag Limited and partners, European Metal Recycling Limited and University of Birmingham have been awarded a grant from the Industrial Strategy Challenge Fund, delivered by UK Research and Innovation, for a new project entitled “Rare-Earth Extraction from Audio Products” (“REAP” or the “Project”).

REAP will investigate ways of recycling rare earth magnets from speakers used in automotive and consumer electronics applications, which account for approximately 20% of the current market for rare earth magnets, according to Adamas Intelligence, and therefore represent a significant opportunity for rare earth magnet recycling.

Mkango’s subsidiary, Maginito Limited, holds a 25% equity interest in HyProMag, with an option to increase its interest up to 49%.

Comment: 30,000 t of magnets in speakers? Interesting.

RareX (ASX:REE) begins exploration at Weld North

RareX (REE) has begun exploration at the Weld North Rare Earths Project in Western Australia.

Weld North covers a large magnetic anomaly that may represent a carbonatite intrusive complex, similar to Lynas Corporation's (LYC) high-grade Mt Weld mine, which lies 84 kilometres south of Weld North.

Aircore (AC) drilling is scheduled to begin later in the week with aims to test under the cover sequence of the interpreted intrusion.

Nova Scotia Supreme Court Awards IBC Costs at Four (4) Times the Standard Tariff Plus Disbursements Following Dismissal of Ucore's Motion

In a decision dated November 18, 2020, the Nova Scotia Supreme Court awarded costs to IBC Advanced Technologies, Inc. ("IBC") against Ucore Rare Metals, Inc. ("Ucore"), after dismissing Ucore's contempt motion in favor of IBC. The Nova Scotia Supreme Court assessed the amount of costs payable to IBC at four times the Tariff amount that would normally apply, plus disbursements. 

Australian Strategic Materials (ASX:ASM) produces key permanent magnet alloy

Australian Strategic Materials (ASM) has produced six kilograms of a neodymium iron boron (NdFeB) alloy with the Korean Institute of Rare Metals (KIRAM).

The key permanent magnet alloy was made from a neodymium-iron alloy produced by ASM’s metallisation pilot plant.

Hastings Technology Metals Ltd (ASX:HAS) Yangibana Mineral Resource Report 2019

Hastings Technology Metals Ltdd announces that the Yangibana Mineral Resource Report 2019 has been lodged with the ASX to support tenement applications in Western Australia as required by the Government of Western Australia Department of Mines, Industry Regulation and Safety.

To view the report, please visit:
https://abnnewswire.net/lnk/3INV869I

Hastings Technology Metals Ltd Annual General Meeting Presentation November 2020

- Highest contents of key rare earth elements for any known rare earth project
- 92% of ore value contained in the 4 key elements required for electric vehicle market
- Highest value Rare Earths Project for Ore value per kg
- 75 - 175% higher value ore products than any current producing rare earth project

To view the AGM presentation, please visit:
https://abnnewswire.net/lnk/82S3SOQW

Comment: Sounds like pure gold! We’ll look into it and report back here.