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Posts tagged ‘united states’

Who gets a stake in this strategic U.S. asset—the Russian billionaire, the Chinese company or both?

June 16th, 2017

by Greg Klein | June 16, 2017

Efforts to reduce U.S. dependency on Chinese rare earths took an uncertain turn on June 15 as a group representing three American firms and a Chinese REE producer placed the winning bid for Mountain Pass. But the sale of bankrupt Molycorp Minerals’ former California mine, until its 2015 shutdown the only REE operation in the U.S., faces a number of challenges.

Who gets a stake in this strategic U.S. asset—the Russian billionaire, the Chinese company or both?

Mountain Pass: Could one rival bidder get the
mine while another holds the mineral rights?

The US$20.5-million top bid came from MP Mine Operations LLC, which “includes two noteholder groups from Molycorp’s original bankruptcy as well as Chinese investor Shenghe Resources Shareholding Co Ltd,” reported Law360.com. Shenghe Resources Holding is a Chinese company engaged in smelting, deep processing and sales of rare earths and other metals, according to Bloomberg, which notes Shenghe is a subsidiary of the China Geological Survey Institute of Multipurpose Utilization of Mineral Resources.

The bid surpassed a US$20-million stalking horse from ERP Strategic Minerals, part of the U.S.-based ERP Group of companies headed by Tom Clarke. The American billionaire credits his group with “a strong track record of restarting mines acquired out of U.S. bankruptcy and Canadian CCAA situations.” ERP planned to work with Pala Investments, headed by Russian-born billionaire Vladimir Iorich, and ASX-listed Peak Resources for financial, technical and operational support of the Mountain Pass mine and processing facility.

ERP had challenged the rival bid in court, saying the offer could be blocked by the U.S. Committee on Foreign Investment or other regulators, Law360.com stated. The journal quoted ERP arguing that, without a pre-bid review, “the stalking horse bidder will be prejudiced by having to compete against unfair, non-complying bids, and there is a real risk of a flawed auction and a failed sales process.”

Who gets a stake in this strategic U.S. asset—the Russian billionaire, the Chinese company or both?

Bankrupt Molycorp’s former assets include an REE processing facility.

A judge allowed the auction to proceed, “setting the stage for a sale hearing on June 23,” Law360.com added. The site previously reported that the hearing was scheduled to consider objections from three federal regulatory agencies that say the former operation’s permits can’t be transferred through the auction.

According to Peak Resources, ERP will file an objection to the auction by June 19 “and may consider other legal remedies” prior to the June 23 hearing.

But members of the winning group already hold the mineral rights, according to the Financial Times. Last month the paper stated the rights are held by MP Mine Operations members JHL Capital Group and QVT Financial, both Molycorp creditors, along with Oaktree Capital. The American firms planned to work with Shenghe, the Chinese REE processor.

Contemplating a successful ERP bid prior to the auction, “Mr. Clarke said his group could still use the mine site to process material from elsewhere if they did not get the mineral rights—but he hoped to negotiate for them if he wins,” the paper added.

Mountain Pass went on care and maintenance in 2015 after Molycorp piled up some US$1.7 billion in debt. That left Lynas Corp’s Mount Weld operation in Western Australia as the world’s only significant source of rare earths outside China, which produces and processes about 90% of global supply.

The U.S. Geological Survey considers rare earths critical to the country’s economy and defence. Under the proposed METALS Act, a bill before U.S. Congress, the federal government would support the development of domestic sources and supply chains for critical minerals including rare earths.

Linking the chain

June 9th, 2017

The REE world comes together at the Argus Americas Rare Earths Summit

by Greg Klein

What’s the rarest distinction of rare earths—economic deposits, expertise outside China or public awareness of our dependence on these critical metals? Those are concerns crucial to our society and among topics to be discussed as over 100 industry experts and insiders meet in San Diego from June 12 to 14. The event is the Argus Americas Rare Earths Summit 2017 and, with certain geopolitical circumstances looming in the background, this year’s conference might be especially auspicious.

The REE world comes together at the Argus Americas Rare Earths Summit

The San Diego conference scrutinizes several
rare earths topics from a variety of perspectives.

The gathering brings together end users, miners/processors, researchers/consultants and traders, as well as some investors and U.S. government reps. Topics will include supply and demand, the challenges of building non-Chinese supply chains, new developments in recovery and processing, and the potential for new production outside China.

Japanese and European markets get special attention, as does this continent. The North American session will examine the U.S. Defense Logistics Agency’s analytical techniques, rare earths stockpile and R&D programs. The session will also address Donald Trump’s impact on international trade, as well as the METALS Act, a proposed bill to provide government support for domestic sources of critical minerals.

The fate of that Congressional bill could indicate how well American lawmakers understand American dependence on China—and for minerals essential not only to the economy, medicine and green energy, but also to military defence. Those issues should also be understood by the wider populace, believes keynote speaker David S. Abraham.

Author of The Elements of Power: Gadgets, Guns, and the Struggle for a Sustainable Future in the Rare Metal Age, Abraham emphasizes the dubious origins of some necessary commodities, along with their complex and often fragile supply chains.

Companies will be on hand too. Just a few examples include vertically integrated giants Albemarle Corp and Treibacher Industrie, RE supplier HEFA Rare Earth Canada, Burundi miner-to-be Rainbow Rare Earths, along with Canadian advanced-stage RE juniors Matamec Explorations TSXV:MAT and Commerce Resources TSXV:CCE.

Presentations, panels, roundtables and networking—not to mention some conviviality at a brewery tour—portend a valuable three days. This could mark another step towards building vitally important supply chains for vitally important metals. For more information….

Commerce Resources and Ucore Rare Metals to co-operate on rare earths supply chain

June 5th, 2017

by Greg Klein | June 5, 2017

While China dominates the critical rare earths market, two companies plan to work together on potential North American supply and processing. Commerce Resources TSXV:CCE and Ucore Rare Metals TSXV:UCU have signed a memorandum of understanding to conduct metallurgical tests on material from Commerce’s Ashram REE deposit in northern Quebec. Characterized by relatively simple mineralogy and a favourable distribution of magnet feed elements, Ashram is currently moving towards pre-feasibility.

Commerce Resources and Ucore Rare Metals to co-operate on rare earths supply chain

The MOU would integrate Ashram material into Ucore’s SuperLig-One molecular recognition technology facility in Utah. A joint venture of Ucore and IBC Advanced Technologies, the MRT process involves selective separation.

The tests would determine the suitability of Ashram concentrate for a Strategic Metals Complex that Ucore plans to build in Utah to process REEs and platinum group metals. Following the tests, Commerce and Ucore would consider long-term supply and offtake agreements.

Metallurgical tests at a Colorado facility have already produced an Ashram concentrate surpassing 45% rare earth oxides at approximately 75% recovery.

Ashram’s “high-quality and high-grade mineral concentrate … looks to be a very promising candidate for processing via an MRT separation circuit,” commented Ucore president/CEO Jim McKenzie. “The Ashram deposit is large tonnage, good grade, hosts a well-balanced REE distribution with an enrichment in the magnet feed REEs and, perhaps most importantly, is highly accessible. In combination with the SMC, Ashram promises to be a key link in a self-contained North American REE supply chain.”

The news comes as U.S. Congress considers a bill to support domestic supplies and processing for minerals vital to defence, including rare earths. A number of recent reports from the U.S. Geological Survey have highlighted that country’s dependency on possibly insecure foreign sources.

Commerce president Chris Grove added, “Security of supply is vitally important and, with our simple mineralogy and successful use of standard processing, we look forward with Ucore to realizing the goal of an independent North American REE supply chain.”

Another recent MOU signed by Commerce would have independent power producer TUGLIQ Energy study the potential for wind-generated electricity on the Ashram project.

Last week Commerce closed a private placement of $942,630, which followed a February financing that raised $1.72 million including $1 million from Ressources Québec, a subsidiary of the provincial government corporation Investissement Québec.

Read more about Commerce Resources.

Read about the West’s dependency on China for critical minerals here and here.

Alex Demas of the U.S. Geological Survey discusses recent USGS publications on critical minerals

May 26th, 2017

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Larry Meinert of the U.S. Geological Survey warns about the West’s dependency on precarious sources and supply chains of critical minerals

May 17th, 2017

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Converging on batteries

April 23rd, 2017

Benchmark sees big investors wakening as three huge sectors chase three vital minerals

by Greg Klein

It’s “a sign of the times that big investors with big money are starting to look at this space in a serious way,” Simon Moores declared. “We’re seeing it with lithium, that’s just starting. And I think we’re going to see it with the other raw materials as well.” To that he attributes the automotive, high-tech and energy sectors for their “convergence of three multi-trillion-dollar industries on batteries.”

Addressing a Vancouver audience on the April 21st inaugural stop of the third annual Benchmark Mineral Intelligence World Tour, he pointed out that cobalt and graphite have yet to match lithium for investors’ attention. But not even lithium has drawn the financing needed to maintain supply over the long term.

Benchmark sees investment lagging as three huge sectors chase three vital minerals

While EVs still lead the battery-powered revolution, energy storage
will become more prominent after 2020, according to Simon Moores.

Back in 2006, batteries accounted for 22% of lithium demand. Ten years later the amount came to 42%. “We believe in 2020, 67% of lithium will be used for batteries.”

What’s now driving the battery market, almost literally, is electric vehicles. Energy storage will play a more prominent role from about 2020 onwards, he maintained.

He sees three cars in particular that should lead the trend: Tesla Model 3, Chevrolet Volt and Nissan Leaf. As consumers turn to pure electric vehicles with battery packs increasing capacity to the 60 to 70 kWh range and beyond, the industry will sell “hundreds of thousands of cars rather than tens of thousands… the era of the semi-mass market for EVs is beginning and it’s beginning now, this year.”

Last year’s lithium-ion market reached 70 GWh, Moores said. Forecasts for 2025 range from Bloomberg’s low of about 300 GWh to Goldman Sachs’ 440 GWh and a “pretty bullish” 530 GWh from Cairn Energy Research Advisors. As for Benchmark, “we’re at the lower end” with a base case of about 407 GWh.

“What does that mean for lithium demand? A lot of raw materials will be needed and the investment in that space is just starting.”

Lithium’s 2016 market came to about 80,000 tonnes. By 2020, demand will call for something like 180,000 to 190,000 tonnes. While battery-grade graphite demand amounted to about 100,000 tonnes last year, “by 2020, that will be just over 200,000 tonnes.” As for battery-grade cobalt, last year’s market came to just under 50,000 tonnes. “By 2020 it’s going to need to get to about 80,000 to 85,000.”

Benchmark sees investment lagging as three huge sectors chase three vital minerals

Simon Moores: “No other mineral
out there has this kind of price profile.”

Investment so far favours lithium but for each of the three commodities, it’s “not enough, not for the long term,” he stressed.

Three years ago only two battery megafactories had been envisioned. Now in operation, under construction or being planned are 15, with the number expected to grow. “That’s going to be needed if we’re ever going to get anywhere near the forecast that everyone’s saying. Not just us, not just Bernstein or Goldman Sachs, everyone is saying significant growth is here but investment is needed.”

But although Tesla gets most of the headlines, “the new lithium-ion industry is a China-centric story.” The vast majority of megafactories are Chinese plants or joint ventures with Chinese entities operating in South Korea or Japan. “The majority of their product goes to China.”

At the end of last month lithium carbonate averaged $12,313 a tonne while lithium hydroxide averaged about $17,000. Spot deals in China, meanwhile, have surpassed $20,000.

That compares with prices between 2005 and 2008 of around $4,000 for lithium carbonate and $4,500 for lithium hydroxide. Only slightly higher were averages for 2010 to 2014. But prices spiked in 2015 and 2016. “Between now and 2020 we believe lithium carbonate will be in and around an average of $13,000 a tonne and lithium hydroxide will be closer to $18,000 a tonne.”

Those long-term averages “are important for people building mines and investing in this space.”

Except for 2010, lithium prices have shown 11 years of increases, corresponding with battery demand. “No other mineral out there has this kind of price profile.”

Moores sees no oversupply or price crash for lithium in the next five years. Spodumene-sourced lithium “will fill the short-term supply deficit and brines will help fill the longer-term supply deficit post-2019 and 2020,” he said. “Both are needed to have a strong, balanced industry in the future.”

Turning to graphite, he noted that batteries had zero effect on the market in 2006. By 2016 they accounted for 16% of demand. By 2020, that number should jump to 35%.

While flake graphite comprises the feedstock for most anode material, “really, the price you should look at is spherical graphite.” That’s fallen lately to about $2,800 a tonne.

Moores foresees better margins for companies producing uncoated spherical graphite. “The people who make the coated will also make good margins, but not as good as in the past. For this reason, and because battery buyers are becoming more powerful and there’s more competition in the space, we believe the coated spherical graphite price will actually fall in the long term average, but will still be between $8,000 and $12,000 a tonne. So there’s very high value and significant demand for this material.”

He also sees natural graphite increasing its anode market share over synthetic graphite. “That’s a cost issue primarily, but there are green issues too.”

Silicon, he added, “will play a part in anodes but it will be an additive, not a replacement.”

Speaking with ResourceClips.com after the event, Moores said Benchmark World Tour attendees differ by city. The Vancouver audience reflected the resource sector, as well as fund managers attracted by BMO Capital Markets’ sponsorship. Tokyo and Seoul events draw battery industry reps. Silicon Valley pulls in high-tech boffins.

This year’s tour currently has 15 cities scheduled with two more under consideration, he noted. That compares with eight locations on the first tour in 2015. Moores attributed the success to Benchmark’s access to pricing and other sensitive info, as well as Benchmark’s site visits. “We go to China and other countries and visit the mines,” he said. “Our travel budget is through the roof. We’re not desktop analysts.”

U.S. Rep. Duncan Hunter calls on government to support domestic resources and supply lines for critical minerals

April 18th, 2017

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More critical than ever

April 13th, 2017

The USGS promotes awareness about essential resources and their supply chains

by Greg Klein

Let’s call it Critical Minerals Awareness Month. The U.S. Geological Survey hasn’t actually labelled April that way, but the agency does have a “big push” underway to inform American decision-makers and the general public about the country’s often tenuous hold on commodities vital to the economy and security of that country. Of course those concerns apply to its allies as well.

The USGS promotes public awareness about essential resources and their supply chains

“We decided to do a big push on critical minerals in April largely because we’ve got several big publications coming out on the subject,” USGS public affairs specialist Alex Demas tells ResourceClips.com.

“One of the things we’ve been focusing on is supply chain security, so with the sheer number of mineral commodities that are used in the United States, and the number of them deemed critical, we felt it was important to emphasize where a lot of those mineral resources are coming from and if there are any potential issues in the supply chain, getting them from the source to the United States.”

Computers provide an obvious example, increasing their use from “just 12 elements in the 1980s to as many as 60 by 2006,” points out one recent USGS news release. Smartphones offer another example. Looking back 30 years ago, “‘portable’ phones were the size of a shoebox and consisted of 25 to 30 elements,” states another USGS release. “Today they fit in your pocket or on your wrist and are made from about 75 different elements, almost three-quarters of the periodic table.”

Larry Meinert, USGS deputy associate director for energy and minerals, pointed out some of the sources. “For instance, the industrial sand used to make the quartz in smartphone screens may come from the United States or China, but the potassium added to enhance screen strength could come from Canada, Russia or Belarus. Australia, Chile and Argentina often produce the lithium used in battery cathodes, while the hard-to-come-by tantalum—used in smartphone circuitry—mostly comes from Congo, Rwanda and Brazil.”

That brings an ominous warning. “With minerals being sourced from all over the world, the possibility of supply disruption is more critical than ever.”

The campaign also reveals the agency’s methods for tracking this essential stuff. A USGS-designed early warning system described as “mathematically rigorous and elegant” helps the U.S. Defense Logistics Agency monitor a watch list of about 160 minerals. Not all have been labelled critical, but those so defined can change due to technological development and geopolitical conflict.

The USGS itself tracks something like 90 minerals important to the American economy or security but sourced from about 180 countries. For last year the agency identified 20 minerals on which the U.S. relied entirely on imports and 47 on which the country imported more than half its supply.

Not all the source countries are always best buddies with the West. China supplies most of America’s mined commodities, including 24 of the 47 minerals supplied 51% or more by imports. Among the critical items are rare earth elements, 100% imported, over 90% directly from China and much of the rest through supply chains originating there.

As a supplier, Canada came a distant second, the chief provider of 16 minerals, not all of them critical. Runners-up Mexico, Russia and South Africa were each chief suppliers for eight American mineral imports.

Among the research reports coming soon will be “a compendium of everything the USGS knows about 23 minerals critical to the United States,” Demas says. “It’s going to cover the industry side of things, the reserves, production, shipment, etc. It’s going to cover geology and sustainability. Each chapter on each mineral will have a section on how this can be mined sustainably so we can meet our needs not only today, but also in the future.”

In part the publications target “decision-makers in Congress, as well as the Defense Department and others who use mineral resources,” Demas adds. But he emphasizes the campaign wasn’t motivated by the proposed METALS Act (Materials Essential to American Leadership and Security). Currently before U.S. Congress, the bill calls on government to support domestic resources and supply chains of critical and strategic minerals. On introducing the bill, Rep. Duncan Hunter argued the risk of foreign dependence to national security “is too great and it urgently demands that we re-establish our depleted domestic industrial base.”

As Demas notes, “Since we are a non-regulatory, non-policy agency, we don’t directly influence policy. But we do want policy-makers to have our tools available so they can make the best science-informed decisions.”

And while this month will see special attention to critical minerals, Demas says the subject’s an ongoing concern for the USGS. Some of the reports coming out now will be updates of annual publications.

“We’re really trying to promote the idea that USGS has a lot of really useful information that we put out all the time,” he adds. “This information will hopefully be useful to people when they’re considering where their resources are coming from.”

Follow USGS news here.

Read about the West’s dependence on non-allied countries for critical minerals here and here.

USGS: Possibility of supply disruption more critical than ever

April 5th, 2017

by Greg Klein | April 5, 2017

USGS: Possibility of supply disruption more critical than ever

Many and various are the sources of smartphone minerals.
(Map: U.S. Geological Survey)

 

In another article warning of foreign dependency, the U.S. Geological Survey uses smartphones as a cautionary example. Looking back 30 years ago, “‘portable’ phones were the size of a shoebox and consisted of 25 to 30 elements,” pointed out Larry Meinert of the USGS. “Today they fit in your pocket or on your wrist and are made from about 75 different elements, almost three-quarters of the periodic table.”

USGS: Possibility of supply disruption more critical than ever

Smartphones now require nearly 75% of the periodic
table of the elements. (Graphic: Jason Burton, USGS)

The increasing sophistication of portable communications results from a “symphony of electronics and chemistry” that includes, for example, “household names like silicon, which is used for circuit boards, or graphite used in batteries. Then there are lesser known substances like bastnasite, monazite and xenotime. These brownish minerals contain neodymium, one of the rare earth elements used in the magnets that allow smartphone speakers to play music and the vibration motor that notifies you of new, funny cat videos on social media,” the USGS stated.

Almost as varied are the sources. “For instance, the industrial sand used to make the quartz in smartphone screens may come from the United States or China, but the potassium added to enhance screen strength could come from Canada, Russia or Belarus. Australia, Chile and Argentina often produce the lithium used in battery cathodes, while the hard-to-come-by tantalum—used in smartphone circuitry—mostly comes from Congo, Rwanda and Brazil.”

Rwanda and the Democratic Republic of Congo are also sources of conflict minerals.

“With minerals being sourced from all over the world, the possibility of supply disruption is more critical than ever,” Meinert emphasized.

The April 4 article follows a previous USGS report on an early warning system used by the U.S. Defense Logistics Agency to monitor supply threats. In January the USGS released a list of 20 minerals for which the country relies entirely on imports. Whether or not by design, the recent awareness campaign coincides with a bill before U.S. Congress calling on government to support the development of domestic deposits and supply chains for critical minerals.

See an illustrated USGS report: A World of Minerals in Your Mobile Device.

Read about the West’s dependence on non-allied countries for critical minerals here and here.

U.S. employs early warning system to identify critical minerals

April 3rd, 2017

by Greg Klein | April 3, 2017

A method of tracking critical minerals has grown from an American defence program to include commodities necessary to the country’s economy. Developed by the U.S. Geological Survey, the “early warning screening tool” guides the Defense Logistics Agency in monitoring supply threats, the USGS reported on April 3.

U.S. relies on early warning system to identify critical minerals

Minerals can be considered critical for consumer uses as well as
military applications such as this long-distance laser rangefinder.
(Photo: U.S. Department of Defense)

Described as “mathematically rigorous and elegant,” the system started with the DLA’s watch list of about 160 minerals crucial to national security. In 2015 the USGS expanded the tool to consider economic security as well.

“The system accounts for several variables in identifying critical minerals, including how vulnerable the supply chain is to disruption, how much production growth is expected for the material, and market dynamics,” the USGS stated. Further analysis allows the DLA “to define a cutoff point for analysing potentially critical materials for shortfalls.”

Different minerals can be labelled critical “as technology changes and geopolitical unrest shifts,” the USGS added.

In a report released last January, the USGS listed 20 minerals on which the U.S. imports its entire supply. Included were several critical commodities. A Congressional bill introduced in March calls on the federal government to encourage domestic sources and supply chains for rare minerals.

Read about the West’s dependence on non-allied countries for critical minerals here and here.