Shenghe Focus On Dominating China RE Imports; Costly Radiation; REO World Market Size Rises to US$ 7.5 Billion; RE Prices Keep Rising;

2021 Rare Earth January 20

<Rant>When people get interviewed on rare earth and China, they like to quote Deng Xiao Ping, because they deem it important as a part of China rare earth conspiracy: The Middle East has oil, China has rare earth (中东有石油,中国有稀土). He is quoted to have said that on his “Southern Tour” during spring 1992 (not during his visit to Baotou 1987, where he might have picked it up from someone).

2 years ago Forbes made Deng Xiao Ping prime minister of China, which is not correct, but keeps popping up when RE executives get interviewed.

Deng did briefly serve as deputy premier under Zhou Enlai from 1974 until 1976, when after Mao death he was purged one last time, this time by the Gang of Four.

The last official post Deng held after 1987 was Chairman of the Central Military Commission of the Central Committee of the Communist Party of China (China’s soldiers’ oath of allegiance is to the CCP, not to the People’s Republic).

But in November 1989 Deng handed this job to Jiang Zemin from Shanghai, at that time the newly appointed general secretary, who replaced the disgraced Zhao Ziyang. Jiang had been lifted to heaven, because he had no blood on his hands from the fateful national uprising that started in spring 1989. Under Jiang’s tenure in Shanghai only one person met a violent death related to the months of uprising - as a result of an accident in Shanghai Railway Station.

Deng held no official post when he coined this famous quote.</Rant>

China Aluminium’s Shenghe Resources new 1.5 million t mineral sands facility at Lianyungang is expected to turn out 20,000 t of monazite per year. Start of production is scheduled for September, 2021.

But what will Shenghe do with all this monazite?

Shenghe Resources and its ultimate controller China Aluminium formed a joint venture for a pre-existing rare earth facility in Funing, 145 km south of Lianyungang. That is, where the Lianyungang monazite will be headed. This concept will further cement China Alumimiums dominance of East China.

It will be interesting, if and how China Northern Rare Earth Group and Minmetals respond. There is also a deeper domestic political story to this, but explaining it here would go to far.

Shenghe Resources own another mineral sands facility of 500,000 t/y capacity in the southern province of Hainan. That province will open to foreign direct investment in rare earth from Feburary 1, 2021.

Two years ago Shenghe Resources established a joint venture with China National Nuclear Corporation in Ningbo for the trading and processing of radioactive rare earth minerals, e.g. monazite.

The company is called China Huaming Mining Co., Ltd. and has a registered capital of RMB 128 mio, of which Shenghe Resources contribute 45%.

China Huaming may well be the only licensed importer of International Maritime Dangerous Goods (IMDG) Class 7 monazite to China in future and hence may become the single customer for aspiring global monazite suppliers, similar to Shenghe being the sole and single customer of MP Materials bastnaesite.

It is easy to predict, that a massive clampdown on unlicensed China imports of “zirconium sand”, the common misrepresentation of monazite, will follow, timing perhaps on the heels of Shenghe Resources Lianyungang facility opening.

A restrictive import sitiuation for monazite in China could lead to favourable procurement market conditions for monazite processors elsewhere on the planet, e.g. Energy Fuels and perhaps Medallion.

If not, they would have to compete for monazite sources against China.

Talking about radiation and monazite, some monazites have a very high thorium content, for example Angolan monazite. For one deposit the thorium content even exceeds the praseodymium content (the “Pr” in NdPr):

Source: Journal of African Earth Sciences. Vol, 29, No. 4, pp. 735-759, 1999


Nb and REE mobilization at the Longonjo carbonatite, Angola, (Calvo, Melgarejo, Alfonso, Bambi - January 2011) put the thorium content even higher:

Why this matters:

That little blip there cost Lynas additional AU$ 500 mio of post start of production investment, so that in future only radiation-free concentrate is being shipped from Mount Weld, Australia, to Lynas’ separation facility in Kuantan, Malaysia. On top of this come the cost for a permanent disposal facility (“PDF”) in Malaysia for the ca. 500,000 t of - according to the company - insignificantly radioactive waste that have accumulated in Kuantan over the years.

While the Lynas example may be extreme, radioactive materials are not a trivial matter.

Pensana, who are exploring Angola’s Longonjo, recently changed their concept from shipping rare earth concentrate to China to creating a Lynas clone, i.e. concentrating the raw material in Angola and shipping the concentrate off to a processing facility in Yorkshire, UK, to separate rare earth oxides there.

At the time of the preliminary feasibility study Longonjo had not been declared an ore reserve, to say it was not known if Longonjo was economically feasible. It was merely a step on the path of finding out, a general indicator.

AACE is the Association for the Advancement of Cost Engineering. AACE Class 4 is the lowest-but-one class of estimate for a maturity level of project definition deliverables of 1%-15%, with an expected accuracy range of -30% on th low side to +50% on the high side.

According to the PFS, an extraordinary feature of Longonjo seems to be that “dilution of plant feed and mining losses are assumed to be insignificant.

Given the preliminary nature of such AACE Class 4 preliminary feasibility study it would have been unreasonable to raise questions on periferal matters, among others:

  • The impact of Angolan royalties/taxes, kicking in after Year 3 of operations, also in view of the then to be increased output

  • What the thorium/uranium content is in the feed material and in the concentrate (given the deposit’s glowing reputation)

  • Concept and cost of compliant disposal of radioactive material - if any - in either UK or in Angola

  • Putting faithful assumptions aside, recovery rates from mining via processing, if any, e.g. if most RE content isn’t lost already by the PFS-proposed floatation of this specific ore, et al.

We look forward to the bankable feasibility study (BFS). Given the company’s uncompromising stance on sustainability and pledge of adherence to highest standards of EGS, the BFS will certainly offer answers to the questions regarding perifieral matters, left over from the PFS.

Rare earth oxide, the common tradeable form of rare earths, used to have a world market value of US$ 3.5 - 4 billion. Thanks to recent price increases, that world market size is now US$ 7.5 billion, 93% of which are the permanent magnet materials:

Rare earth prices keep climbing and NdPr scratches on the US$70/kg glass ceiling…

…..and we wonder, if and how much of these massive cost increase since November permanent magnet makers can pass on to permanent magnet users:

Quousque tandem - how much longer can this continue?

Thanks for reading, have a wonderful week!


Pensana to delist from the ASX

LSE-listed rare earth and magnet metals developer Pensana Rare Earths plans to delist from the ASX.

Innovative rare earth pilot heralds bright recycling future

Modern vehicles include a range of small magnets that power headlights, electronics and sensors and weigh in at around 250g. These do not include the larger ones inside the catalytic convertor, traction motor or generator….

Strong sales in the consumer electronics sector continue to drive demand for rare earths. Martinez reports that demand for dysprosium, for example, will be almost three times higher by 2030 and six times higher by 2050. Demand for neodymium and praseodymium will be up 50% by 2030 and 150% higher by 2050.

‘In short, we are at risk and the inevitable supply bottleneck is a great concern,’ Martinez told delegates at the recent E-waste World Expo. ‘Europe collects around four million tonnes of e-scrap per year. This means that around 370 tonnes of neodymium and 15 tonnes of dysprosium, with a value of EUR 23 million, is available for recycling.’

Extrapolating market figures, the ‘urban mine’ could hold 14 135 tonnes of primary magnets by 2025, growing to 25 325 tonnes by 2030 and 44 500 tonnes by 2050.

Getting the material back can be tricky, though, because they make up only 3% of the weight of a computer (hard drive or optical drive) and less than 0.5% of that of a mobile phone which has no fewer than 14 small magnets.

Rare earth scrap from used air conditioners is expected to reach almost 11 000 tonnes by 2040. Other major sources will be e-bike batteries (10 000 tonnes) and e-car batteries (9 000 tonnes)….

‘We were able to obtain a recycled magnet at a competitive cost of EUR 25 per kg. This means that a semi-industrial plant with a capacity of 70 tonnes per year could be financially viable given today’s prices for rare earths,’ she says. 

Comment: A call for further subsidies from the EU…. And strong endorsement of listed recycler Geomega’s concept, who plans larger than Sintef. Geomega neither had EUR 9 mio in subsidies, nor did it have 14 industrial partners, but still Geomega may well be the first one to market.

Shenghe Resources plans 2022 revenue to exceed 10 billion yuan and will grant 23 million restricted shares at a discount of 51%

On the evening of January 18, Shenghe Resources (600392) disclosed a "Operation and Development Plan for 2021-2022" (hereinafter referred to as the "Plan"). According to the profitability target set by the "Plan", the company's revenue in 2021 will reach 9 billion yuan, exceeding 10 billion yuan in 2022. For reference, Shenghe Resources' revenue in 2019 was 6.96 billion yuan, and revenue in the first three quarters of 2020 was 5.5 billion yuan. 

The data shows that at present, Shenghe Resources actually masters about 50,000 tons of REO each year of various rare earth resources, the rare earth separation capacity is about 15,000 tons/year, the rare earth metal processing capacity is 12,000 tons/year, and the seaside placer processing capacity is 500,000 tons/year.

According to the business development goals set by the "Plan", among the company's rare earth mines (including custody and underwriting products), the production and sales volume of bastnaesite will be 40,000 tons as REO in 2021 and 2022, and monazite will be 10,000 tons as REO in 2021 and 2022 increase to 15,000 tons as REO; the rest of the production and sales plan also involves rare earth oxides (key elements), rare earth metals (key elements), and zirconium and titanium.

At the same time, the company will strengthen business ties with overseas strategic cooperative enterprises, consolidate business partnerships through a diversified structure of capital, capital, technology, and markets, stabilize and guarantee the supply of raw materials, and lay a solid foundation for the company's business development.

Comment: The quantities are huge. Will that be in line with the new 5-year plan? We’ll see it, when the plan is going public.


China to step up protection of rare earth resources

China will reinforce the protection of its rare earth resources, strengthen full industrial chain regulation and establish a mechanism under the State Council to decide and coordinate on major policy measures, according to a draft guideline published on Friday.

The guideline was published on the website of the Ministry of Industry and Information Technology and will be kept open for public opinion till Feb 15.

Comment: We reported and commented on January 16.

Department of Energy launches Minerals Sustainability Division

The U.S. Department of Energy (DOE) has announced the establishment of a Division of Minerals Sustainability to bring an increased focus to securing a US critical minerals supply chain that will transform the US energy and manufacturing systems to make them cleaner, more resilient, and more secure.

Indonesia's nuclear dream has been revived?

The Indonesian Bangka-Belitong (Banka Belitung) archipelago, located off the east coast of Sumatra, is estimated to have 95% of Indonesia’s thorium. Thorium itself cannot be used in traditional thermal neutron reactors, but once neutrons are absorbed, it will be converted into uranium 233, which is an excellent fission fuel material, especially suitable for (advanced) molten salt reactors.

What's more attractive is that thorium and uranium can be extracted from unconventional resources, especially monazite, which usually coexists with Indonesia's rich tin resources. The Ministry of Defense appears to be interested in building a small thorium molten salt reactor with a generating capacity of 50 megawatts by 2025 for specific national security purposes, such as powering ships. 

As one of the developing countries, Indonesia, which has abundant resources, and its nuclear energy ambitions also make external international agencies face increasingly severe difficulties. In other words, nuclear material inspection is not only to identify uranium deposits, but also to determine their traces after excavation. More and more inspections involve thorium and unconventional uranium resources such as phosphate rock, monazite, rare earth elements, black shale, lignite and some seawater experiments. Recent technological advancements have made it possible to recover uranium from different unconventional minerals.

Indeed, Indonesia is very keen to develop mineral purification and separation technologies to utilize its rich mineral resources, and BATAN is taking the lead in developing radioactive minerals. Open source research on news and scientific publications shows that Indonesian researchers are carrying out extensive research work to extract uranium and thorium from unconventional resources (especially monazite) that are usually mined on the same site as the country’s tin mines. Indonesia is the largest tin producer in the world. In May 2020, Indonesia made major changes to its mining laws, especially the introduction of new types of permits for the mining of radioactive materials.

Usually, these unconventional nuclear materials are underreported in the global uranium statistics, such as the Red Book of the OECD. What is worrying is that these unusual nuclear sources may become a way to secretly obtain uranium, thereby bringing possible proliferation risks.