by Greg Klein | March 9, 2017
With an eye to national defence, American lawmakers will decide whether their government should help develop domestic supplies of rare minerals. A Congressional bill introduced March 7, Rep. Duncan Hunter’s proposed METALS Act (Materials Essential to American Leadership and Security) would offer a number of inducements to create supply lines for strategic and critical commodities.
“The U.S. must no longer be wholly dependent on foreign sources of strategic and critical materials,” said Hunter, a veteran of two combat tours in Iraq and one in Afghanistan. “The risk of this dependence on national security is too great and it urgently demands that we re-establish our depleted domestic industrial base.”
Pointing to China’s lockhold on over 90% of global rare earths supply, Hunter argued the U.S. has “ceded” its ability to produce REEs. Following the bankruptcy of the last U.S. rare earths miner, Molycorp “sold a portion of its assets to the Chinese,” said a statement from Hunter’s office. “The mine is now being considered for purchase by a firm with ties to a Russian billionaire.”
As reported by the Wall Street Journal last month, a group including Vladimir Iorich’s Pala Investments has offered US$40 million for Molycorp’s former Mountain Pass mine in California. The METALS Act would prohibit foreign acquisition of American rare earths deposits.
It would also provide five-year interest-free loans for new production or manufacturing techniques involving strategic or critical minerals. Additionally, Washington would reimburse defence programs for higher costs of domestic products. Funding would divert 1% of Department of Defense administration spending, Hunter said.
The act would also bar foreign interests from sourcing American supplies of ammonium perchlorate, a propellant for rockets and missiles. The bill further calls for a study on the viability of using thorium-fuelled nuclear reactors in naval vessels.
Besides encouraging supply chains essential to national security, the bill “supports the U.S. domestic industrial base by aiding domestic investment opportunities,” according to Hunter’s office.
Speaking with ResourceClips.com last month, David S. Abraham expressed skepticism about Hunter’s proposal. “Most bills on critical materials have not passed and his bills usually have the least chance of passing…” said the author of The Elements of Power: Gadgets, Guns, and the Struggle for a Sustainable Future in the Rare Metal Age. “That’s not to say the U.S. hasn’t given money to metallurgy and mining before, but with the exception of some dabbling in beryllium in the ’90s, I can’t recall a time where the U.S. was really investing in mines from a defence perspective.”
But Washington defence lobbyist Jeff Green told ResourceClips.com of “a totally different dynamic” in circles of power that would be willing to “invest in America to protect our national security and grow our manufacturing base.”
A January report from the U.S. Geological Survey stated the country was wholly dependent on foreign sources for 20 minerals last year, some of them considered critical or strategic “because they are essential to the economy and their supply may be disrupted.”
As of press time Hunter’s office hadn’t responded to an interview request.
by Greg Klein
Something of an epiphany came to him in 2010 as he watched the aftermath of a minor incident in internationally disputed waters. China’s shock-and-awe response turned its near-monopoly on rare earths into a mighty geopolitical weapon, exposing the perilous nature of our dependence on seemingly obscure commodities. That inspired David S. Abraham’s 2015 book The Elements of Power: Gadgets, Guns, and the Struggle for a Sustainable Future in the Rare Metal Age. Now, as a similar confrontation threatens to flare up again, he sees the West still unprepared for further attacks on vital supply lines.
Asked whether people in power have at least gained greater awareness, his response is a firm No.
Speaking on the phone from Indonesia, Abraham took time to discuss the issue with ResourceClips.com. The 2010 event, of course, began with the China-Japan territorial dispute in the East China Sea. Late last year American warships entered the South China Sea, in another challenge to China’s claim to sovereignty. Yet compared with previous years, “I think we’re even more vulnerable to shock in our supply lines,” he says.
“If you look at rare earths, in 2010 there were opportunities for new supplies to come onstream quite quickly, and they’ve since failed. People look at that failure and say these places couldn’t compete, they couldn’t produce economically, so they failed.”
China, having pushed up prices exponentially by withholding rare earths, swung to the other extreme and flooded the market. That dashed the hopes of many potential non-Chinese producers yet encouraged complacency among end-users. “But the supply lines themselves really look no different than they did back then,” Abraham cautions.
Of course the problem’s hardly limited to rare earths. Just one example Abraham points to is cobalt and the Democratic Republic of Congo. Estimates of DRC supply range from 51% of the world total (2015 figures from the U.S. Geological Survey), to nearly 60% (Benchmark Mineral Intelligence), to 65% (Disruptive Discoveries Journal). That gives a disproportionate amount of supply not only to a single country, but one plagued with political instability and conflict mining.
Troubling too is the ownership.
Already a major player in the country, China stands to increase its DRC position should China Molybdenum and a Chinese private equity firm succeed in their $3.8-billion purchase of a majority interest in Tenke Fungurume, one of the world’s biggest copper-cobalt mines. With a 20% stake, the DRC state-owned company Gécamines has tried to block the sale but reportedly accepted a $100-million settlement.
What you see China doing is really consolidating up the supply line…. What they’re trying to do is build up their material capacity so other people producing batteries have to use material coming through China.—David S. Abraham
“What you see China doing is really consolidating up the supply line…. What they’re trying to do is build up their material capacity so other people producing batteries have to use material coming through China.”
The country fosters economic growth by “adding to the value chain that they can produce in their own country. It’s a strong economic argument. It’s not dissimilar to what Trump says, but he hasn’t really gone into the deep thinking that’s happening in China.”
Certainly, China’s strategic approach contrasts with the West. That’s suggested by the example of Tenke Fungurume’s would-be vendors, the American/Canadian team of Freeport-McMoRan NYSE:FCX and Lundin Mining TSX:LUN.
“For those companies, it’s about profits,” Abraham acknowledges. “The question is, what are the technology companies thinking about? Companies like Apple are trying to do a better job of understanding where their materials come from, but some of the others are less concerned.”
With the U.S. military in mind, Rep. Duncan Hunter is anticipated to propose a congressional bill that would help develop domestic supplies of rare minerals.
Abraham’s skeptical. “Most bills on critical materials have not passed and his bills usually have the least chance of passing…. That’s not to say the U.S. hasn’t given money to metallurgy and mining before, but with the exception of some dabbling in beryllium in the ’90s, I can’t recall a time where the U.S. was really investing in mines from a defence perspective.”
If decision-makers lack awareness, they’re not alone, he believes. Abraham sees little evidence that consumers understand the issues. “People talk about being concerned about where these materials come from but they really have to understand the challenging supply lines, and that’s what the book was trying to introduce people to,” he says. “It’s still a little too complex to fathom and I don’t think people think beyond ‘my phone causes conflict in Congo’ and get to the point that ‘my phone leads to geopolitical war.’”
If so, that makes The Elements of Power as timely now as it was in 2015. A paperback edition comes out in April.
In concluding the phone call, Abraham offers a maxim: “Nothing changes very fast. Then everything changes all of a sudden.”
by Greg Klein | March 1, 2017
Looking at the dual benefits of cutting costs and cutting emissions, Commerce Resources TSXV:CCE and TUGLIQ Energy have signed a memorandum of understanding to assess the potential for wind energy on the Ashram rare earths project. Announced February 28, the MOU follows TUGLIQ’s preliminary evaluation of local and regional wind data proximal to the northern Quebec deposit that Commerce is advancing towards pre-feasibility. Funding for the wind energy study comes partly from the province’s Ministère de l’Énergie et des Ressources naturelles.
An independent power producer already active in northern Quebec, TUGLIQ operates a 3 MW wind turbine with energy storage that the company built in 2014 at Glencore’s Raglan mine. In the Northwest Territories, the Rio Tinto NYSE:RIO/Dominion Diamond TSX:DDC Diavik mine has been supplementing its diesel power with a four-turbine, 9.2 MW wind farm since 2012.
TUGLIQ’s Ashram study will consist of wind resource assessment, electrical system engineering and an integration study including assessment of greenhouse gas emission reductions.
“We are excited to be collaborating with TUGLIQ and to have the support of the Quebec government on this renewable resource project,” said Commerce president Chris Grove. “We look forward to evaluating this potential in much further detail. The potential to incorporate cost-effective renewable energy into the Ashram project only makes it that much more attractive for development.”
In mid-February the company closed a $1.71-million private placement that included $1 million from Ressources Québec, a subsidiary of the provincial government corporation Investissement Québec. The money will be used to complete Ashram’s pilot plant and produce REE and fluorite concentrates for companies that requested samples. Among them are Solvay, Mitsubishi, Treibacher, BASF, DKK, Albemarle and Blue Line.
Having reached PEA in 2012, the high-grade, near-surface deposit features an impressive distribution of magnet feed elements and relatively simple metallurgy, suggesting a potentially low-cost operation.
Quebec maintains its respected position as a mining jurisdiction, according to a Fraser Institute study released February 28. “Quebec ranks third in Canada and sixth globally—up from eighth spot last year—and is the only other Canadian jurisdiction [along with Saskatchewan and Manitoba] in the top 10 worldwide for overall investment attractiveness,” the FI stated.
In another rare metals project, Commerce holds the Upper Fir tantalum-niobium deposit in southeastern British Columbia, which reached PEA in 2011 and a resource update in 2013.
by Greg Klein | February 17, 2017
With potential customers waiting for rare earths concentrate samples, Commerce Resources TSXV:CCE closed a $1.71-million private placement on February 17 that included $1 million from Ressources Québec. A subsidiary of the provincial government corporation Investissement Québec, Ressources Québec “focuses on projects that have good return prospects and foster Québec’s economic development,” the organization says. “Its role is complementary to private funders.”
We are excited to have the support of the Quebec government with this investment from Ressources Québec. The province of Quebec continues to prove that it is one of the most attractive jurisdictions to develop a mineral project. —Chris Grove,
president of Commerce Resources
“We are excited to have the support of the Quebec government with this investment from Ressources Québec,” Commerce president Chris Grove stated. “The province of Quebec continues to prove that it is one of the most attractive jurisdictions to develop a mineral project. We are excited to be advancing our Ashram project with this financing.”
The private placement will be used to complete the project’s pilot plant, to produce samples of REE and fluorite concentrates, and for general working capital. Among companies requesting REE samples are Solvay, Mitsubishi, Treibacher, BASF, DKK, Albemarle and Blue Line.
The money comes in addition to a three-year, $300,000 environmental grant from the province to optimize tailings management.
Ashram’s high-grade, near-surface deposit benefits from relatively simple metallurgy, suggesting a potentially low-cost operation with an impressive distribution of magnet feed elements. Now moving towards pre-feas, the project reached PEA in 2012.
Commerce also holds the Upper Fir tantalum-niobium deposit in southeastern British Columbia, which reached PEA in 2011 and a resource update in 2013.
by Greg Klein
The timing seems ominous. As rival American and Chinese warships assert themselves in the disputed South China Sea, the United States Geological Survey reported 20 minerals on which the U.S. imports all of its supply. Included are rare earths—coming almost entirely from China, of course. It was a 2010 conflict in the same troubled waters between Japan and China that caused the latter country to cut off rare earths exports to its adversary. As other supply chains broke apart, REE prices went on an exponential tear. Might China do that again and, this time, are American decision-makers sufficiently concerned?
They should be, say some observers. Additionally, there also looms the possibility of a trade war sparked by U.S. tariffs on Chinese goods. Yet some REEs are necessary not only for consumer electronics and clean energy, but also for military defence.
The 20 entirely foreign-dependent minerals reported by the USGS represent an increase from 19 the previous year and 11 in 1984. The list includes rare earths, scandium and yttrium as three separate categories. In February 2016 Industrial Minerals reported that the U.S. Department of Defense “identified 15 of the 17 rare earths as critical over the last five years.”
Having foreseen as far back as 2009 the possibility of China using REEs as a geopolitical strategy, Jeff Green watches the topic from a defence perspective. “I think about the tools China has to retaliate and rare earths come right to the top of the list,” he says.
Green has recently served on the U.S. House Armed Services Subcommittee on Readiness. He’s a lawyer, a member of the U.S. Magnetic Materials Association and the REE World Advisory Board, a U.S. Air Force Reserve colonel and a former USAF missile combat crew commander. He describes his Washington firm J.A. Green & Company as “primarily a defence lobbying company that’s really interested in the nexus between national resource security and national security.”
He finds the U.S. government’s concern stronger and better informed than previously. That contrasts with events leading to what he calls the “Molycorp fiasco,” a supposed market solution to the 2010 shock and a strategy that he warned against. It went on to “burn the market to the tune of one and a half billion dollars.”
The result? “Today we’re probably in a more dire China-dependent situation than ever before.”
But Green sees hope in a Congressional bill that he anticipates being introduced within a week or so. Rep. Duncan Hunter’s proposal would help American companies develop domestic supplies of REEs and other minerals critical to defence. Assistance could come in the form of no-interest loans, Green says. Additionally the Department of Defense might pay more for American products made from American commodities, with the government reimbursing the difference between domestic and Chinese costs until American companies can compete.
It’s not a pure free market economic philosophy but one that will say: ‘If we’ve got a critical supply risk and we’ve got domestic companies that can fill that gap, then let’s invest in America to protect our national security and grow our manufacturing base.’—Jeff Green
As for the bill’s chances of success, Green’s optimistic. “You’ve got an administration that is very pro Buy American, Hire American. You’ve got a Congress that very much supports manufacturing. It will be much more pro-mining, pro-industry than we’ve seen. It’s not a pure free market economic philosophy but one that will say: ‘If we’ve got a critical supply risk and we’ve got domestic companies that can fill that gap, then let’s invest in America to protect our national security and grow our manufacturing base.’
“It’s a totally different dynamic than Washington’s seen in 40 years.”
Chris Berry agrees about the need for subsidies, among other assistance. In a research report last year the president of House Mountain Partners and editor of the Disruptive Discoveries Journal warned of the cost of not creating a supply chain outside China. In an e-mail to ResourceClips.com he notes that the “mine permitting, exploration and building process would all need to be expedited through legislation and through subsidies. This is the only way I see non-Chinese deposits being able to compete with China’s RE production costs. The good news is that as various technologies grow in importance (such as EVs) and existing processes grow as well (fluid cracking catalysts), this implies steady demand for REEs.”
While Berry considers the establishment of new supply chains “a multi-year endeavour,” he adds, “a focus on recycling or funding of materials science to minimize foreign dependence of these materials is a reasonable near-term solution to encourage supply chain development.”
As for the raw materials, Green maintains the U.S. has REE resources sufficient for defence needs, which he says are relatively small. “We’re not trying to compete globally in the automotive, magnet or catalyst markets,” he emphasizes. “We’re trying to protect our national security needs.”
Yet the Congressional bill calls for assistance to all aspects of the supply chain, he says, “whether that’s processing, refinement, separation, beneficiation, metal production, alloy production, magnet production.”
Support for supply chains would benefit other sectors, he points out. “This is the old NASA model. The government for years invested in new technologies and we’ve reaped the benefits in consumer advancements. Just look at the refining industry for petroleum products, at catalysts, phosphors in electronics, magnets for vehicles, battery materials. I think the commercial applications are terrific.
“I believe the president will kind of cheerlead this effort along,” he adds. “That’s really a game-changer. He’s going to take the traditional free trade model and turn it on its head. He’ll say the rest of the world doesn’t play by these rules so we’re going to play smarter—we’re going to treat our industries like the rest of the world treats theirs.”
by Greg Klein | January 31, 2017
Lacking any domestic sources at all, the United States imported 100% of its supply of 20 minerals last year, the USGS reports. That number increased from 19 the previous year and 11 in 1984. Included in the 2016 list were rare earths, manganese and niobium, “which are among a suite of materials often designated as ‘critical’ or ‘strategic’ because they are essential to the economy and their supply may be disrupted.”
Imports of rare earth compounds and metals increased 6% over 2015, although the value dropped from $160 million to $120 million. China supplied 72% directly, with other imports coming from Estonia (7%), France (5%), Japan (5%) and other countries (11%).
But the Estonian, French and Japanese material was derived from concentrates produced in China and elsewhere, the USGS added.
American imports of tantalum increased about 40% over 2015. The USGS attributed about 37% of 2016 global production to the Democratic Republic of Congo and 32% to Rwanda. Estimates reverse those numbers for the previous year.
An alphabetical list of the 20 minerals follows, with rare earths, scandium and yttrium each comprising a separate category:
The report listed 50 minerals for which the U.S. imported over half of its supply. Overall China was the largest exporter, with Canada running second.
by Greg Klein
The appeal to Western markets is obvious—an advanced, low-cost rare earths project in a friendly jurisdiction. So even before the recent military build-up in the South China Sea, Commerce Resources TSXV:CCE experienced an increase in American requests for concentrate samples from its northern Quebec Ashram deposit. With the U.S. Navy now challenging Chinese territorial aggression, the confrontation seems to pit two superpowers against each other. But what does that really indicate?
It’s actually “one lonely small old Russian-built carrier against three U.S. Nimitz-class supercarriers,” Commerce president Chris Grove points out. “So when Beijing says it’s going to take off the gloves, I think they’re referring to trade.”
That brings to mind the Senkaku incident, a much smaller 2010 confrontation in the same region that prompted China to cut off rare earths exports to Japan, sending global supply chains into turmoil and prices soaring. A possible Senkaku redux is one of a number of aspects to a global paradigm shift that Grove sees coming, to the benefit of Western industry in general and Ashram in particular.
The U.S. might easily outgun China, but China produces about 90% of the world’s rare earths. They’re essential to several defence needs, “a fact that really drives certain people in the U.S. absolutely apoplectic,” says Grove.
While Westerners have struggled to compete with China on costs, prices mean little to the U.S. Department of Defense, which last year began putting money behind potential domestic processors, Grove says. That support complements a multi-faceted advantage that the West is gaining over China, he explains. The latter country struggles with rising labour costs and the need to finally address its environmental woes. Meanwhile Western countries offset their labour costs with technological innovation and maintain the world’s highest environmental standards.
Even putting aside defence, demand for rare earths continues to grow with another global development. The international commitment to address climate change through clean energy, exemplified by the Paris Agreement, increases rare earths demand for numerous applications ranging from EVs to wind turbines.
In a research report last year, Chris Berry noted that “REE usage continues to grow at a pace well above global GDP growth with demand CAGRs growing anywhere from 4% to 8%, with permanent magnet demand forecast to lead this charge to 2020.”
Clearly there’s a market for non-Chinese sources. And Grove sees Ashram uniquely positioned to help serve that market. Certainly others have failed but, he emphasizes, they lacked Ashram’s benefits of mineralogy, metallurgy, grade and jurisdiction—all of which add up to lower costs.
The project reached PEA in 2012, with an amended PEA in 2015. Since then the company’s been busy on multiple fronts as it advances towards pre-feasibility.
Ashram’s advantage begins with its relatively simple mineralogy, with carbonatite host rock and rare earths within the minerals monazite, bastnasite and xenotime, which dominate commercial REE processing.
Pilot plant metallurgical tests have quadrupled the PEA’s concentrate grade, producing 41% total rare earth oxides and 43% TREO, both at 71% recovery. That puts the grade well within the range of commercial producers and does so through a single-leach process that simplifies the flowsheet.
Requests for concentrate samples have come from Solvay, Mitsubishi, Treibacher, BASF, DKK, Albemarle and Blue Line, among others covered by non-disclosure agreements.
Metallurgy has also found a potential fluorspar byproduct, offering an advantage to both revenue and opex. Grove credits Glencore Canada’s interest in fluorspar with the willingness of its NorFalco Sales division to supply Commerce with sulphuric acid on highly favourable terms.
Proud as he is of Ashram’s high-grade, near-surface resource, Grove anticipates an even more impressive upgrade. The current estimate uses a 1.25% cutoff to show:
Commerce has since drilled another 9,200 metres, mostly infill but always with some stepout holes as well. “In all those drill programs, we always hit mineralized material in the stepouts, we always encountered less waste rock at surface than was modelled in the resource and we always hit zones that were higher than the average grade,” he says.
Ashram’s magnet feed distribution also has Grove enthused. Overall, the deposit ranks with the largest producers for praseodymium, neodymium, terbium and dysprosium. Ashram’s medium-to-heavy REO resource, moreover, surpasses the producers for those elements. And, as Grove points out, those are critical elements. Efforts to find substitutes for magnet REEs have failed.
Companies with higher operating costs are probably praying for higher prices. Commerce Resources doesn’t need them. We still have a margin at today’s prices.—Chris Grove
Benefiting both Ashram’s opex and the environment would be wind energy, currently being studied for the project. Commerce’s environmental commitment as well as its community outreach have been recognized by the e3 Plus Award for social responsibility from l’Association de l’exploration minière du Québec.
The company has also received a $300,000 provincial grant to optimize tailings management, funding that shows Quebec’s commitment to mining as well as the environment. Grove calls the province “a fantastic jurisdiction,” one that invests directly in companies through Ressources Québec and makes tangible progress on the visionary Plan Nord infrastructure program.
Following a private placement of up to $2.5 million offered last month, Grove looks forward to a number of near-term milestones. Still to come are final assays from last year’s drilling. The agenda also calls for completing the pilot plant and filling requests for REE and fluorspar concentrate samples. The samples, Grove suggests, could spur interest in a JV or offtake agreement.
The Commerce quest for rare metals hasn’t been confined to rare earths. Last September sampling on the company’s property about a kilometre from Ashram found “spectacular” results up to 5.9% niobium pentoxide, described by Grove as “approximately double the grade of the largest and longest-running niobium producer’s head grade, CBMM’s Araxa deposit in Brazil.”
Commerce also holds the Blue River project in southeastern British Columbia. The property’s Upper Fir tantalum-niobium deposit reached PEA in 2011 and a resource update in 2013.
But Commerce remains very much focused on Ashram. Whether events in the South China Sea send RE prices soaring, Grove sees possible increases coming from producers boosting revenues. But, he emphasizes, Ashram doesn’t need higher prices. “Companies with higher operating costs are probably praying for higher prices,” he says. “Commerce Resources doesn’t need them. We still have a margin at today’s prices.”
by Greg Klein | January 26, 2017
A rare earths property in British Columbia’s Rocky Mountain rare metal belt gains new attention as Canadian International Minerals TSXV:CIN takes another look at previous assays. An 11-hole program on the Wicheeda alkaline-carbonatite project in 2011 targeted rare earths but the company didn’t consider the niobium results to be material info. On January 26, however, CIN released niobium assays from four 2011 holes, with highlights showing:
True widths weren’t available.
Formerly called the Carbo project, Wicheeda showed RE results in the range of 0.2% to 0.5% total rare earth oxides in most of the 11 holes sunk during 2011. The previous year’s campaign found significant RE mineralization in all nine holes, with one intercept hitting 1.43% TREO over 37.3 metres.
Adjacent to CIN’s Wicheeda, Spectrum Mining’s Wicheeda project holds an inferred 11.3 million tonnes averaging 2.5% TREO.
CIN noted two niobium deposits hosted in the Rocky Mountain rare metal belt. The Upper Fir deposit on Commerce Resources’ (TSXV:CCE) Blue River project holds an indicated 48.41 million tonnes averaging 0.161% Nb2O5 and 197 ppm Ta2O5. Located about 330 kilometres southeast of Wicheeda, Upper Fir also holds an inferred 5.4 million tonnes averaging 0.176% Nb2O5 and 191 ppm Ta2O5.
About 240 kilometres northwest of Wicheeda, Taseko Mines TSX:TKO brought the Aley project to pre-feas in 2014 with proven and probable reserves of 83.8 million tonnes averaging 0.5% Nb2O5.
CIN stated it “continues to re-evaluate the exploration targets for the Wicheeda project and will be investigating a number of partnership avenues in the coming weeks.”
In November the company released sample results from a due diligence program on its proposed Tisova acquisition, a former copper-polymetallic mine in the Czech Republic.