Vietnam RE fake news, policy details; Seabed authority missed deadline; Japan govt RE mission to Africa; ZF's RE-free EV motor; Update from Pensana; Aclara low recoveries; USA RE sued for fraud;
Rare Earth 3 September 2023 #128
Fake news
Vietnam rare earth independence
We learn from an intelligence source, whom we have been expressly forbidden to cite, name and link to, that Vietnam makes efforts to detach itself from China in rare earth.
The source reports Vietnam having tried to touch base with Advanced Semiconductor Material Lithography (ASML) because “it wants the group to help it acquire mining and processing technologies to fulfil its rare earths goals.”
Further the source goes about ASML having received mentoring from the US government on rare earth.
Then the source goes about the recent agreement between ASM’s Korean subsidiary, Vietnam Rare Earths JSC and Blackstone Minerals regarding the establishment of a rare earth supply chain.
All that would be related to Vietnam’s mineral policy in which Hanoi details its vision for the rare earth sector through to 2050, by which time it aims to mine 2.112 mio t.
The source mentions Vietnam Rare Earth JSC would be a daughter company of China’s state-controlled Shenghe Resources, the company who is major shareholder, financier, sole customer and the lifeline of
MP Materials,
Peak Rare Earth, and
Energy Transition Metals (previously known as Greenland Minerals).
Our take
The source may be confused and not very intelligent.
We can think of no candidate less equipped to deal with rare earth than semiconductor equipment maker ASML;
We also can’t envision a worse mentor in rare earth than the US government, apart from perhaps the EU government;
Vietnam Rare Earth JSC’s (VTRE) ownership is ambiguous:
VTRE were established in 2011;
Shenghe Resources successively acquired a Hong Kong company with a rare earth subsidiary in Vietnam called Integral Materials Investment Vietnam JSC, starting 2014 with 40% (Shenghe currently hold 90%). The target was owned by Chinese compatriots who hold foreign passports;
However, Integral Materials Investment Vietnam JSC are never mentioned as a subsidiary in Shenghe’s mandatory disclosures;
While officially Vietnam Rare Earth JSC is officially owned by an individual, the company is consistently named as a Shenghe Resources subsidiary in Shenghe’s mandatory disclosures;
At the time of Shenghe’s initial 40% acquisition of Integral Materials Investment Vietnam JSC in 2014 the capacity of the target was 5,200 t TREO per year. At the same time Vietnam Rare Earth JSC’s capacity was only a fraction of that, according to our findings;
The locations of Integral Materials Investment Vietnam JSC and Vietnam Rare Earth JSC are separate:
Source: Google Maps Integral Materials Investment Vietnam JSC at Halong (24,000 square meters - looks somewhat dormant):
Source: Google Maps
Vietnam Rare Earth JSC at Tiên Tân, Duy Tiên, Hà Nam (20,000 square meters):
Source: Google Maps How Vietnam Rare Earth JSC acquired the rare earth know-how and how it financed its business and its substantial expansion over the years is unknown.
It is conceivable that Vietnam Rare Earth JSC and Integral Materials Investment Vietnam JSC may be under the same umbrella, i.e. China state-controlled Shenghe Resources. This would explain a lot.
Shenghe Resources are a state-controlled entity
Some people occasionally feel the uncontrollable urge to mistakenly tell the world of Shenghe Resources is a public or a private company.
We would recommend to read just one single random annual report of Shenghe Resources.
One will find:
Indirectly the Ministry of Finance is Shenghe’s largest shareholder, and
Expressis verbis the Ministry of Finance of the People’s Republic of China is named as Shenghe’s ultimate controller.
Curiously, his well-known fact also appears in the risks section of Shenghe’s annual reports - as a risk.
State-ownership/state-control is by no means intrinsically negative, but it is, what it is.
Vietnam’s minerals policy - “Decision 866/QD-TTG”
APPROVED PLAN FOR EXPLORING, MINING, PROCESSING AND USE OF MINERALS PERIOD OF 2021 - 2030, VISION TO 2050
Rare earth minerals: To develop the industry of mining, processing and using rare earth minerals in a synchronous, efficient and sustainable manner. Newly licensed enterprises to exploit rare earth minerals must be associated with processing projects to produce at least the sum of oxides, hydroxides, and rare earth salts with TREO content ≥ 95%. Separate rare earth elements (REO), advanced technology, modern equipment, maximum recovery of associated useful minerals, environmental assurance, radiation safety.
You certainly remember the three party agreement between nickel miner Blackstone, Vietnam Rare Earth and ASM’s Korea metal maker regarding rare earth from Dong Pao. Well, here you can see, the downstream integration has become mandatory for rare earth miners in Vietnam.
Mining
Until 2030 Vietnam wants to increase the number of rare earth miners from 2 to 10 and increase the rare earth mine output to 2,020,000 tons/year;
Until 2050 the number of rare earth miners is to rise to 13 and the rare earth mine output is to rise to 2,112,000 tons/year;
Exploration and mining details:
In the period to 2030:
To step up the search for mining technologies and markets associated with deep processing of rare earth minerals at mines that have been licensed for exploitation such as Dong Pao - Lai Chau; Yen Phu - Yen Bai.
Expect new investment in mining projects in Lai Chau (5), Lao Cai (3); Yen Bai (1).
Total mining output to reach ≈ 2,020,000 tons of raw ore per year.
Period 2031 - 2050:
Maintain the operation of existing projects, invest in expanding Dong Pao mine and invest in 3 - 4 new mining projects in Lai Chau and Lao Cai if there are investors synchronously from exploration, exploitation and processing associated with product consumption markets.
Total mining output to reach ≈ 2,112,000 tons of raw ore per year.
Processing
In terms of processing, these are the targets:
Until 2030 Vietnam wants to increase the number of processing companies from 1 (located in Yen Phu commune, Van Yen district, Yen Bai province) to 7 and the output to 62,500 t of TREO/year;
By 2050 the number of processing companies should rise to 7 and the output should rise to 82,500 t of TREO/year.
Processing details
Period to 2030:
Complete investment in rare earth processing house in Yen Phu commune, Van Yen district, Yen Bai province.
Total rare earth oxides (TREO): New investment from 3 hydrometallurgy-rare earth processing projects in Lai Chau and Lao Cai provinces with processed products by 2030 (excluding processed output of imported raw materials of previously invested factories);
Separate rare earths (REO): New investment in rare earth extraction and processing projects in Lai Chau and Lao Cai provinces or suitable locations for separate rare earth products until 2030 (excluding processed output of imported raw materials of previously invested factories);
Output estimated at 20,000 - 60,000 tons/year.
Period 2031 - 2050:
Based on the actual situation, invest in expanding and increasing the capacity of existing projects. Focus on deep processing of rare earth metals;
Total rare earth oxides (TREO): 40,000 - 80,000 tons/year;
Separated rare earth (REO): 40,000 - 80,000 tons/year;
Rare earth metals: Invest in a new rare earth metallurgy plant, a location selected by the investor with a total capacity of rare earth metals from 7,500 - 10,000 tons/year.
Resources and reserves
Vietnam assess the above as follows:
Reserves: 3,472,347 t TREO
Resources including forecasts: 16,349,207 t TREO
Total reserves plus resources/forecasts: 19,821.554 t TREO
The latest report of USGS estimates Vietnam’s rare earth reserves at 22,000,000 t.
How Vietnam wants to achieve all that
In terms of finance, the policy says:
State budget
Capital investment for projects to investigate and evaluate mineral resource potential; exploration for some types of toxic and radioactive minerals.
Prepare, adjust, build and manage data on mineral planning.
Funding support for scientific research activities, application of mineral selection and processing technology for integrated, economical and effective use of non-renewable mineral resources in accordance with the Science Program and National Key Technology serving innovation and modernisation of mineral exploitation and processing technology, as approved by the Prime Minister.
Mobilising capital in the international market: A number of special, large-scale projects, modern technology, pilot investment in deep processing as a premise for developing synchronous production chains and sustainable development large-scale resources, the Government will consider supporting businesses through loan guarantees according to legal regulations.
Mobilise other capital sources: Mobilise capital from domestic and foreign organisations, individuals, and businesses in compliance with the provisions of law.
Problem: Human resources:
Develop plans to recruit and train human resources in accordance with industry requirements and development progress of mineral exploitation and processing projects, especially highly skilled technical human resources for operations. Mineral mining and processing machinery and equipment have advanced technology and access to new technology.
Focus on recruiting and training on-site workers, especially in mountainous areas with difficult and especially difficult socio-economic conditions.
Having policies to attract high-quality human resources, and give preferential treatment to mining workers, especially underground mining workers.
Focus on taking care of life, material and spiritual for employees.
Link mines with domestic and international training institutions, adopt policies on recruitment, skill improvement training, joint training or sending abroad for training with a high quality and committed labor source. with profession.
For the team of officials, civil servants, and management officials in minerals and metallurgy, it is necessary to recruit and arrange people with expertise and practical experience; Support and update legal knowledge on natural resources and environment and related laws. In particular, it is necessary to strengthen the team of local cadres, civil servants and public employees.
Open for business
In other words, quite different from its neighbour in the north, in rare earth Vietnam is wide open for business, expressly including foreign investors, with the obvious aim of lessening the resource-slave relationship with Vietnam’s northern neighbour.
Laos is in the process of heading in a similar direction.
Caution
Vietnam is still a socialist country. If you invest, you should be quite clear that there is a supreme power above the law who giveth and taketh.
India: Rare earth mentioned on the SCOMET list
The SCOMET (Special Chemicals, Organisms, Materials, Equipment, and Technologies) list is a comprehensive control list maintained by the Government of India.
It contains items that are subject to export controls due to their potential dual-use nature, meaning they can have both civilian and military applications. The SCOMET list includes a wide range of items such as chemicals, biological agents, materials, equipment, and technologies that have significance for national security and strategic concerns.
Rare earth are mentioned as an addition to zirconium oxide:
The Legal Fight Over Deep-Sea Resources Enters a New and Uncertain Phase
In July 2021, the Pacific Island State of Nauru triggered Section 1(15) of the UNCLOS Implementation Agreement, a provision that establishes a two-year window for the finalization of a set of rules, regulations, and procedures to govern seabed exploitation. If, by 9 July 2023, a Mining Code was not finalized, then Section 1(15) dictates that the ISA was required to begin considering and provisionally approving deep-sea mining contracts without overarching regulations. Nauru triggered the two-year rule in part because of a contract with The Metals Company, a resource extraction company with plans to begin exploitation in the Clarion-Clipperton Zone with Nauru as its sponsor in as early as 2024. The Clarion-Clipperton Zone is a vast abyssal plain in the Pacific Ocean that is of particular interest to miners, as it is rich in valuable and rare heavy metals.
Despite years of intensive ISA discussions, July of 2023 came and went without a finalized Mining Code.
While some states and corporations believe the solution lies miles below the ocean surface, the cost of extracting metals embedded in the seafloor may be too great. The seabed harbors tons of polymetallic nodules, small rock clusters with high concentrations of rare earth elements, but these nodules are submerged in tracts of biodiverse land that provides sustenance for much of the ocean ecosystem. The Clarion-Clipperton Zone alone has an estimated 21 billion tons of polymetallic nodules, clusters that are rich in cobalt, manganese, and nickel, among other rare earth elements. (James R. Hein et al., Deep-Ocean Polymetallic Nodules as a Resource for Critical Materials (2020)). By comparison, the total production of cobalt in the DRC in 2022 was 130,000 tons.
Conversely, the true environmental cost of deep-sea mining may not become apparent until the damage is irreversible. The substratum is essential in the nutritional chain of the ocean, and the downstream effects of deep-sea mining may therefore entail far more environmental harm than good. Several of Nauru’s fellow Pacific Island States, like Samoa, Fiji, and Palau, have all called for a moratorium on deep-sea mining because of the potential environmental stakes. In the absence of an effective regulatory regime, the ISA will be limited in its ability to monitor and effectively vet potential mining operations – and island nations and the coastal community, may be left with the bill. For now, the future remains uncertain, but the ISA’s failure to meet its deadline suggests seismic shifts in the rare earth metals market could be on the way.
This is nothing short of alarming.
Fact
In terms of rare earths there are known deposits plus explored resources containing solid 200-250 years of current world consumption. Add to this the potential of thousands of occurrences which remain unexplored plus recycling kicking-in about 10-15 years from now.
At least as far as rare earths are concerned there is absolutely no good reasons to touch ocean floor resources, other than pure ambition.
Bureaucrat inertia
There is certainly no lack of explanations and excuses, when it comes to responsibility for this 3-6.
But perhaps ISA officers should have done what bureaucrats can do best: Draw up a code with conditions that would be impossible to fulfil, for as long as there remain significant environmental uncertainties.
Japan testing China’s hold on African minerals
Japan’s Minister of Economy, Trade and Industry Yasutoshi Nishimura has spent a week visiting five countries in southern Africa with Ichiro Takahara, chairman and CEO of the state’s Japan Organization for Metals and Energy Security (JOGMEC).
“Namibia has great potential for rare earths. The Democratic Republic of the Congo is the world’s largest producer of cobalt and Namibia also has potential, he said according to the Sankei Shimbun.
“I would like to visit each country, sign more than 10 agreements, issue joint statements, realize cooperation agreements and build a supply chain. Budget support of approximately $1.5 billion (215.8 billion yen) for Japanese companies participating in the development of mines and related activities is also available.”
With such budget in hand, it will be more than sufficient to move forward on the rare earth processing and separation in Namibia.
Joint effort
In response to the Namibia ban on export of unprocessed ores, Namibia Critical Metals (Lofdal - xenotime), E-Tech Resources (Eureka - monazite) and Ondoto Rare Earth (Pty) Ltd. (Ondoto - bastnaesite) have formed a consortium to jointly evaluate the technical potential and feasibility of developing a REE separation facility.
If it should not be feasible, it would probably become a big problem of the three, because they won’t be able to bring their products to the market.
Japan’s interest
Will JOGMEC chip-in through a Japanese sogo shosha? Is a Namibian “mini-Lynas” in the making? Since Japan has solved its problem on the “light side” by creating Lynas, it may only be interested in the “heavy side”, Lofdal.
China’s rare earths dominance makes U.S. supply chains vulnerable, trade representative says
China’s dominance in rare earths makes U.S. supply chains vulnerable, U.S. Trade Representative Katherine Tai said in an exclusive interview Saturday with CNBC’s Martin Soong.
Rare earth metals are used in high-tech products such as electric car motors. Over the decades, China has built up its ability to process the metals — giving it enormous pricing power in a critical global market.
“What I want to draw your attention to is not just the vulnerabilities around China’s investments [overseas], but the fact that China’s dominant position in the world market now in [rare earths] means that it is able to turn on the faucet and turn off the faucet,” Tai said.
The dependence is a triple one:
Rare earth permanent magnets
Rare earths for magnet applications (basically Japan only)
Rare earths for other applications
The trade representative should know
After the win of the rare earth case over China at the WTO in 2014, the Democrat-led US let all RE initiatives lapse. Adding to the folly, the Republican-led US handed over control of the Mountain Pass rare earth mine to China in 2017, ignoring all warnings and pleads from experts.
The core of the problem
China, while urging others to reject revanchism and revisionism, paradoxically indulges in both with a fervour of its own.
China persists in its pursuit of redress for the Century of Humiliation and seeks retribution for past instances of exploitation by various parties throughout history.
Rare earths have become part of this quest.
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