Semiconductor Shortage To Affect Rare Earth; RE Prices Softer; 5-Year-Plan KPI; Quo Vadis, MP?; Burundi RE Export Suspension; China Q1 2021 RE Exports Are......Just Normal; Russia Advances In RE;

2021 Rare Earth Apr 18

There are estimates, that the shortage of semiconductors could potentially reduce automotive output by 20%.

We remember that automotive, whether electric, hybrid or internal combustion engine is good for 50% of permanent magnet demand.

2020 output of permanent magnets was an estimated 207,000 t, 50% of that automotive, i.e. 103,500 t.

Consequently, the above overall minus of 20% in automotive would come to reduced demand of permanent magnets for automotive of 20,700 t, containing roughly 30% of NdPr, Dy and Tb, 6,210 t, conversion loss not considered. The above is of course something for experts like Argus and Adamas to calculate more accurately.

Our point here is, that the forced reduction of vehicle output owing to semiconductor shortage would probably more than equalize China’s loss of raw material imports from Myanmar (~10% of NdPr supply).

The China Rare Earth Association forecast may materialise, however, for different reasons than anticipated.

Chinese speculators, who overstocked REO (commonly on credit) in order to profit from increasing prices, will now slowly but surely have to look for someone to sell the stocked material to, and that usually means offering an advantageous price.

Magnet materials:

Others:

Remember, these are ex-works China quoted average prices, converted to US$ at the official daily exchange rate, for average materials, so the a.m. can only guide to general price levels and trends.

Exchange rate development:


China’s 5-Year Plan key performance indicators (KPI):

Source: carbonbrief.org

Note, that the environmental KPI are all binding, not just indicative.

A let up in environmental compliance enforcement for RE companies can therefore hardly be expected.


China Q1 2021 RE exports are higher than for the same periods 2019 and 2020:

Large monthly swings of RE export numbers are normal, nonetheless certain media like to hype changes on every single opportunity:


Rainbow Rare Earths Ltd has received notification from the Government of Burundi of a temporary suspension on the export of [rare earth] concentrate”, is what we learn from a Rainbow market update.

George Bennett, CEO, said: "Whilst we are currently uncertain of the origins of this development in Burundi, I am in Burundi, undertaking ongoing, constructive discussions with the Ministry and other stakeholders to resolve this issue and allow exports to recommence.

We demonstrated several times during the past 12 months, that there is something we like to refer to as “Africa Risk”. It is entirely beyond comprehension that a company doesn’t have (non-white) African directors to help the company navigate risks, when the company actually depends completely on Africa operations.

Meanwhile, watch Rainbow’s full-bodied promise of Q2 2021 break-even evaporate.


MP Materials Corp. (NYSE:MP) Short Interest Up 81.4% in March

MP Materials Corp. (NYSE:MP) was the target of a significant increase in short interest in March. As of March 31st, there was short interest totalling 13,480,000 shares, an increase of 81.4% from the March 15th total of 7,430,000 shares. Based on an average daily trading volume, of 5,770,000 shares, the days-to-cover ratio is currently 2.3 days. Approximately 13.1% of the shares of the company are sold short.

MP Materials (NYSE:MP) last released its earnings results on Wednesday, March 17th. The company reported $0.18 EPS for the quarter, beating analysts' consensus estimates of $0.03 by $0.15. On average, sell-side analysts expect that MP Materials will post -0.34 earnings per share for the current year.: MP is building significant liquidity, apparently for the quest to become a mine-to-magnet company and perhaps to add-on some kind of heavy rare earth asset, one way or another.

We do not see any “sell-side analyst ratingsproposing negative earnings per share for 2021, but neither do we see much enthusiasm for MP shares. Probably related to lack of market enhusiasm, the statements made in this interview and elsewhere in the media are pretty borderline, to put it very mildly. For a company that has yet to turn a full year of profit, insider sales of >US$200 worth of MP shares are also far from comforting.

While we can fully understand why MP would want to try a combination of mine to magnet under one roof (who to sell US-made NdPr to, in complete absence of US users?), it may be too challenging for a number of reasons, beginning with lack of any relevant expertise.

There are good reasons for the value chain mine-to-magnet being a distributed one elsewhere.

Last but not least, even if all should go well, MP would need to compete with China- and Japan-made NdFeB permanent magnets, which are well introduced in the market and have a hard-earned reputation.

Chinese suppliers have already now preempted all anticipated medium term growth for NdFeB magnets. In Q1 2021 alone additional capacities for 36,000 t NdFeB magnets were announced in China for SOP 2023, on top of already exsting capacity of 300,000 t.

Given China’s increased domestic NdPr consumption and consequently reduced NdPr export, the glaringly obvious market to go for with additional quantities of NdPr, if MP should ever start to really produce it and in acceptable quality, would be Japan, side by side with Lynas NdPr supply.

Last but not least, in its struggle to free MP from it’s currently complete China dependence, MP stand to lose the sizeable advance payments from China (resp. Singapore), needed before to finance all of MP’s operations.

A withdrawal by China’s possiby disgruntled Shenghe Resources would probably also see the re-introduction of Chinese punitive duties on US-bastnaesite, making a change-of-mind or Murphy’s-Law-encounter induced backpedal of an ambitious young man impossible.


Thanks for reading and welcome to the working week!


//Politics

Russia makes a claim for world leadership in the production of rare earth metals

Specialists of the Chepetsk Mechanical Plant have mastered a new method of producing rare earth metals (REM).

Last year, specialists from the Chepetsk Mechanical Plant (CMP) presented a method for processing loparite ore concentrates, and this year they proposed a method for extracting rare earth metals by original processing of ore containing eudialyte concentrates using nitrous acid.

The method patented by the ChMP team provides for the extraction and separation of rare earth elements, due to which at least 80% of valuable metals are obtained in the output.

The new U.S. plan to rival China and end cornering of market in rare earth metals

The legislation includes $35 billion for climate research and innovation, $46 billion in renewable energy manufacturing and $174 billion to boost the electric vehicle market. China, which accounts for roughly 30% of carbon dioxide emissions globally, plans to reach net-zero carbon emissions by 2060 and outspent the U.S. roughly 2-to-1 on energy transition-related investments in the last decade, according to Bloomberg New Energy Finance data.

Comment: Sounds like some lobbyist wrote the article, just like 7 years ago, shortly before all RE campaigning in the US faltered.

China looks set to reopen border with North Korea

Government documents show the local authorities in Dandong in Liaoning province recently started soliciting bids for a series of projects that suggest the long-delayed New Yalu River Bridge may soon be open for use.

The eight-lane road bridge was designed to replace the Sino-Korean Friendship Bridge built by the Japanese occupiers in 1943, which is only wide enough for a single rail track and a one-way road.

Comment: An opening may also bring about some much needed RE-concentrate from Samcheon and Cholsan in North Korea.

Decrepid Hyesan town, North Korea, seen from across the Yalu river in Changbai City in China and the Sino-Korean foreign trade center at the Changbai Friendship Bridge.

//Recycling

Big Tech backs plan to tackle e-waste crisis

According to the United Nations, more than 50 million tonnes of electronic waste was discarded in 2019, with the vast majority ending up in landfill and on scrap heaps.

Those products contain gold, silver, copper and platinum as well as highly-prized rare earth metals.

With only 17 percent of products recycled, the UN estimates that materials worth more than $55 billion (50 billion euros) are being wasted every year.

Researchers creating a safer, cleaner way to recover rare-earth metals from old phones and laptops

Electrodeposition is already used to recover other metals. In our case, we have designed an environmentally friendly composition based on ionic liquid (salt-based) systems.

We focused on recovering neodymium, an important rare-earth metal due to its outstanding magnetic properties, and in extremely high demand compared to other rare-earth metals.

Ionic liquids are highly stable, which means it's possible to recover neodymium without generating side products, which can affect the neodymium purity.

The novelty of our research using ionic liquids for electrodeposition is the presence of water in the mix, which improves the quantity of the final recovered neodymium metal.

Unlike previously reported methods, we can recover neodymium metal without using controlled atmosphere, and at working temperature lower than 100℃. These are key considerations to industrializing such a technology.

//Companies

Hudson says ‘business as usual’ in Greenland

Hudson president Jim Cambon says the IA party has publicly stated that it is pro-mining and that it has cited the company as a good example of the importance of mining in Greenland.

Comment: Damage control, after the Greenland Minerals debacle.