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Posts tagged ‘western australia’

Update: Lynas responds to Malaysia’s six-month extension for rare earths processing plant

August 16th, 2019

by Greg Klein | August 15, 2019, updated August 16, 2019

Lynas gets a six-month reprieve to continue rare earths processing in Malaysia

Lynas expressed confidence in meeting government-imposed conditions
for its rare earths processing facility in Malaysia. (Photo: Lynas Corp)

 

Even a six-month reprieve augers well for Lynas Corp, the company emphasized on August 16. The Malaysian government granted an extension the previous day after threatening to shut down a plant that refines and separates material from Lynas’ Mount Weld rare earths mine in Western Australia.

The government’s original conditions called for Lynas to render the mine’s output non-radioactive before shipping it to Malaysia and to remove the low-level radioactive waste that has accumulated since 2012. The deadline was September 2, the former licence expiry date.

Lynas said yesterday’s decision was consistent with a science-based government report released last December and the company remains confident of meeting conditions.

The decision’s only significant divergence from the report, Lynas stated, was the requirement that cracking and leaching operations be moved out of Malaysia within four years. Earlier this month CEO Amanda Lacaze said the company hopes to have a C&L facility operating in Western Australia by 2022, part of the company’s $500-million expansion planned by 2025. The new facility would allow Lynas to ship non-radioactive material to Malaysia for further processing and separating.

As for the presence in Malaysia of radioactive water leach purification residue—a reported 580,000 tonnes has piled up so far—the company has six months to find a location and obtain consent for a permanent deposit facility.

Although the government rejected Lynas’ proposal to convert WLP residue into soil conditioner for agricultural use, the company vowed to continue R&D into other possible outcomes.

“While we may have preferred a longer licence … the effect is essentially the same because under either structure there will be an administrative application for renewal,” Lacaze told a briefing for analysts and investors.

In a statement issued earlier that morning, she expressed optimism “that this decision will bring an end to the politicization of Lynas over the past year.”

Last May Lacaze emphasized Lynas’ determination to keep its supply chain separate from the involvement of China, which dominates all aspects of global rare earths production and processing. Considered critical elements by the U.S. for several uses including defence, REs figure prominently in the American-Chinese trade disputes. Consequently the U.S. has implemented policies to encourage production from domestic and allied resources and technology.

Read more about Lynas Corp.

Read more about rare earths, critical elements and the U.S.-China trade dispute.

Lynas gets a six-month reprieve to continue rare earths processing in Malaysia

August 15th, 2019

This story has been updated and moved here.

Northern Minerals shifts RE offtake from China to Germany; Malaysia’s Lynas decision imminent

August 12th, 2019

by Greg Klein | August 12, 2019

A new Western Australia rare earths producer has signed an agreement with a German engineering group to take on 100% of production from the miner’s pilot plant. The deal replaces a previous 100% offtake contract with Chinese firm Lianyugang Zeyu New Materials Sales, which was cancelled last week due to breach of agreement, ASX-listed Northern Minerals announced on August 12.

Northern Minerals shifts REE offtake from China to Germany; Malaysia’s Lynas decision imminent

Browns Range production,
before and after pilot plant processing.

The agreement with thyssenkrupp Materials Trading, a company that claims to have 158,000 “colleagues” on all continents, allows the customer to buy all heavy rare earth carbonate from the Browns Range pilot plant. Future sales may involve separated heavy rare earths. The two companies will also work together on separating technology and potential expansion of the project, Northern Minerals stated. The offtake agreement includes all stockpiled product as well as future output. Production began in July 2018.

Currently in the first phase of a three-stage development plan, Northern Minerals plans to become the “first significant producer of dysprosium outside of China.”

The same day as the offtake announcement, the company reported its board is considering a $20-million investment offer from a Chinese entity. (All figures in Australian dollars.) Northern Minerals added it’s in negotiations with other potential investors. Having so far raised about $19.76 million of a previously offered $30-million private placement, the company expects to close the remainder by the end of August.

Meanwhile Australian RE producer Lynas Corp expects a decision any day now by the Malaysian government regarding the fate of the miner’s processing facility. Although the plant has operated since 2012, a new government demanded the company ensure all material sent to the country from the Mount Weld mine in Western Australia be rendered non-radioactive prior to shipment. The government also ordered the removal of radioactive tailings accumulated over seven years. Although the plant’s licence expires on September 2, Lynas officials repeatedly express confidence in the outcome.

The company added that Malaysian Prime Minister Mahathir Mohamad has said licence renewal would no longer require the removal of tailings. Nevertheless, Lynas plans to relocate its cracking and leaching operations to Western Australia by 2022.

Read more about Lynas Corp.

New neodymium and dysprosium sources needed by 2030 to avert shortages: Adamas Intelligence

June 19th, 2019

by Greg Klein | June 19, 2019

As the U.S.-China trade conflict intensifies concern about critical metals, Adamas Intelligence publishes a readable guide to rare earths—what they are, where they come from and what they’re used for.

“In just a period of decades, rare earth elements have seeped deeply into the fabric of modern technology and industry and have proven exceptionally challenging to duplicate or replace,” states the report entitled Rare Earth Elements: Small Market, Big Necessity.

New neodymium and dysprosium sources needed by 2030 to avert shortages: Adamas Intelligence

Image: Ascannio/Shutterstock.com

Of eight categories of end uses, permanent magnets and catalysts garnered over 60% of world demand for total rare earth oxides last year, according to the independent research and advisory firm.

By value, permanent magnets alone surpassed 90% of TREO consumption. “This share is poised to expand further as demand (and prices) for neodymium, praseodymium, dysprosium and terbium continue to rise strongly in the years ahead.”

Looking forward a decade, Adamas forecast that “global annual demand for neodymium oxide and dysprosium oxide (or oxide equivalents) will substantially exceed global annual production by 2030, leading to the depletion of historically accumulated inventories and, ultimately, shortages of these critical magnet materials if additional sources of supply are not developed.”

Outside China, Adamas reports only 8.49 million tonnes of in-situ TREO in 17 deposits considered compliant by NI 43-101, JORC or South Africa’s SAMREC regulations. Located in 10 nations on five continents, just two are in operation: Lynas Corp’s Mount Weld mine in Western Australia and MP Materials’ Mountain Pass mine in California.

The numbers shoot way up and China takes prominence when U.S. Geological Survey data on both compliant and non-compliant deposits is considered. China’s share of the approximate world total of 120 million tonnes comes to about 38%. Another 19% each is ascribed to Brazil and Vietnam, 10% to Russia, and the rest to India, Australia, the U.S. and other countries “presumably dominated by Canada and Greenland.”

Mine production demonstrates China’s overall dominance, which is further confirmed by refining.

Adamas estimates last year’s global TREO and TREO-equivalent mining at 184,000 tonnes, with the Middle Kingdom responsible for 68% of primary production and nearly 100% of secondary production.

Last year’s global production rose 21% over 2017, which Adamas attributed to substantial production hikes in China, Myanmar and the U.S., where Mountain Pass re-opened following the bankruptcy of its former owner.

Additional primary producers were Myanmar (11%), Australia (10%), the U.S. (9%) and others (2%). Virtually all non-Chinese miners rely on China for concentrating and separating rare earths. Lynas stands out as the prominent exception.

The company has a processing facility in Malaysia, but that country has threatened to shut it down by September if Lynas doesn’t remove 450,000 tonnes of low-level radioactive waste accumulated over seven years. Malaysia’s energy and environment minister and Western Australia’s mines minster were to discuss moving the waste to WA, but the Malaysian counterpart postponed a meeting scheduled for June 20 “pending further developments,” Reuters stated. The WA state government has already stated its refusal to accept the waste.

Download the Adamas Intelligence report Rare Earth Elements: Small Market, Big Necessity.

Read more about rare earths and other critical metals.

U.S. critical minerals strategy includes Canada and other allies

June 5th, 2019

by Greg Klein | June 5, 2019

The country’s tariff tactics might present an image of Fortress America battling its adversaries, but a new critical minerals strategy advocates greater co-operation between the U.S. and its friends. The manifestation of Washington’s growing concern about securing resources and building supply chains, a federal report released June 4 announces six calls to action, 24 goals and 61 recommendations accompanied by timelines for accomplishment.

The U.S. includes Canada and other allies in its critical minerals strategy

Clearly, the Donald Trump administration recognizes the problem of relying on potentially unreliable sources, especially when they’re economic and geopolitical rivals: “If China or Russia were to stop exports to the United States and its allies for a prolonged period—similar to China’s rare earths embargo in 2010—an extended supply disruption could cause significant shocks throughout U.S. and foreign critical mineral supply chains.”

Rare earths provide an especially stark example of the problem, the report emphasizes. “The REE industry has experienced downsizing, business failure, and relocation in all phases of the supply chain, including mining, separation, metal reduction, alloying and downstream manufacturing of advanced technology products such as high performance rare earth permanent magnets.”

The report, A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals, follows a number of American initiatives including the formal classification of 35 critical minerals and a Secretary of Defense study released last September.

For 31 of the 35 critical minerals, the U.S. imports over 50% of its supply. For 14 of them, imports account for 100% of supply, creating “a strategic vulnerability for both our economy and our military with respect to adverse foreign government actions, natural disasters, and other events that could disrupt supply.”

If China or Russia were to stop exports to the United States and its allies for a prolonged period—similar to China’s rare earths embargo in 2010—an extended supply disruption could cause significant shocks throughout U.S. and foreign critical mineral supply chains.

Apart from finding new deposits, the report calls for specific measures to encourage R&D, new supply chains, additional and publicly available exploration data, land access and permitting, a workforce with appropriate skills and expertise, as well as international trade and co-operation.

On the latter topic, the report notes significant American reliance on Canada and Mexico for many essentials. “Working with them to develop their critical mineral deposits can help improve the security of U.S. supply.”

Washington’s agenda also calls for expanded collaboration with Canada, Australia, the EU, Japan and South Korea on a range of issues, from finding and developing resources to creating supply chains.

Although the U.S. began addressing the issue early in Trump’s administration, the report’s timing coincides with fears that another Chinese rare earths embargo could happen imminently. The U.S. relies on China directly for 80% of its imports, while much of the remainder comes from China indirectly. America’s sole REE mine, Mountain Pass in California, exports all its production to China.

That leaves Western Australian miner Lynas Corp as the only major producer outside China that is, as CEO/managing director Amanda Lacaze stated, “focused on rest-of-the-world markets, that is non-Chinese markets.” Although her company faces tremendous challenges meeting Malaysian government demands for its processing facility in that country, the government has made mildly conciliatory statements in advance of a June 28 meeting with Lynas.

Update: Following a June 20, 2019, meeting between Trump and Prime Minister Justin Trudeau, the two leaders “instructed officials to develop a joint action plan on critical minerals collaboration,” according to Reuters.

Senkaku revisited

May 29th, 2019

China-U.S. trade tactics highlight rare earths peril and potential

by Greg Klein | May 29, 2019

China-U.S. trade tactics highlight rare earths peril and potential

 

They’re vital to several categories of modern essentials including military defence. But rare earths have themselves become weapons in an escalating conflict between China and the U.S. Despite Washington’s heightened awareness of its critical minerals conundrum, the U.S., like the rest of the non-Chinese world, remains almost completely dependent on its rival-turned-enemy for the rare earths that China threatens to cut off.

Among recent hints, comments and implied threats was last week’s well-publicized visit to a Chinese RE plant by President Xi Jinping and his top trade negotiator, where the leader reportedly steeled his country’s resolve with talk of an impending “Long March.” Additionally significant and non-cryptic code came in a May 29 admonition from the state-run People’s Daily: “Don’t say I didn’t warn you.”

China-U.S. trade tactics highlight rare earths peril and potential

Northern Minerals’ Browns Range pilot plant readies
a Western Australia project for Chinese customers.

If a full-blown trade war’s imminent, it’s not without irony. In a change of plans the U.S. has dropped rare earths from a long list of tariff-attached imports, tacitly acknowledging its dependency on China. China did the opposite, increasing its tariff from 10% to 25% on RE imports from America, a small portion of China’s supply but nevertheless an increase to the cost of its trade war weaponry.

The 17 elements comprise essential components for a host of modern necessities including phones, computers and other communications and electronic devices, electric vehicles, batteries, renewable energy and military defence.

China already mines over 70% of global supply, according to 2018 data from the U.S. Geological Survey, and that doesn’t include illegal Chinese production. The U.S. relies on China for 80% of RE compounds and metals. America imports another 11% from Estonia, France and Japan, but that stuff’s “derived from mineral concentrates and chemical intermediates produced in China and elsewhere,” the USGS added.

The risks of an all-out trade war might be demonstrated by the 2010 East China Sea conflict, where China and Japan both claim the islands of Senkaku. When a Chinese fishing boat captain felt emboldened to twice ram a Japanese naval vessel, Japan arrested him. Within days, China banned all rare earths exports to Japan, crippling its globally important but RE-dependent manufacturers. China also imposed heavy cutbacks and duties on exports to other countries.

China-U.S. trade tactics highlight rare earths peril and potential

A Greenland Minerals MOU would commit the
proposed Kvanefjeld mine’s total RE production to China.

Desperate for RE supply, some non-Chinese manufacturers relocated to China. Meanwhile Western resource companies strove to develop alternative supplies. By 2013 two new mines reached production, Lynas Corp’s Mount Weld in Western Australia and Molycorp’s Mountain Pass in California. The following year the World Trade Organization ordered China to drop its export restrictions on rare earths, as well as tungsten and molybdenum.

China complied with a vengeance, flooding the world with cheap RE supply. America’s WTO victory proved Pyrrhic as a burgeoning non-Chinese supply chain failed to compete. The most salient casualty was Mountain Pass, which suspended operations during 2015 bankruptcy proceedings.

The mine resumed production in early 2018 under new owner MP Materials. But with China’s Shenghe Rare Earth Company a minority shareholder, North America’s only RE producer exports its entire output to China.

Lynas, meanwhile, remains committed to serving non-Chinese markets through a non-Chinese supply chain. But skeptics might consider the company’s strategy precarious. Plans announced last week include a refinery in Texas that’s merely at the MOU stage, an AU$500-million financing commitment that appears inadequate to the company’s needs and an unconvincing proposal to meet a Malaysian ultimatum with alternative ideas.

Home to Lynas’ refining and separation facility, Malaysia insists the company remove over 450,000 tonnes of radioactive waste by September or face a shutdown. The country also wants future Mount Weld material rendered non-radioactive prior to arrival. (Update: On May 30 Malaysia’s prime minister said the government will likely allow Lynas’ plant to continue operation, according to Reuters.)

China-U.S. trade tactics highlight rare earths peril and potential

At a northern Quebec rare earths deposit, Commerce
Resources’ Ashram project moves towards pre-feasibility.

An AU$1.5-billion takeover bid from deep-pocketed giant Wesfarmers might offer a made-in-Australia solution. But Lynas has so far held itself aloof.

The CEO’s commitment to non-Chinese markets, however, differs from some other Australian companies. ASX-listed Northern Minerals, self-described as “the first and only meaningful producer of dysprosium outside of China,” has committed the total production of its Western Australia Browns Range project to China, apparently at the behest of minority shareholder Huatai Mining. Last August ASX-listed Greenland Minerals signed an offtake MOU with majority shareholder Shenghe Resources, which would give China the proposed Kvanefjeld mine’s total RE production.

Technology metals expert Jack Lifton emphasizes the need for non-Chinese resources and expertise: “If we don’t reconstitute a total American supply chain, if the Europeans don’t do the same, for the critical materials like rare earths, cobalt, lithium, we’re going to be out of luck,” he told ResourceClips.com.

Heightened awareness in Washington led to 35 minerals getting a formal “critical” classification, a prelude to last year’s Secretary of Defense study calling for government initiatives to encourage domestic supply chains. More recently, a bipartisan group of U.S. senators proposed legislation to prod the country into action.

That approach rankles those who prefer laissez-faire solutions. Moreover government meddling in the form of trade wars can backfire, libertarians believe. As Rick Rule said last week, “If the Chinese decided to obviate their competitive advantage with some stupid political ploy, they would find themselves with a much smaller proportion of the global market.”

Many investors seem to have agreed. Following China’s May 29 rhetoric, stock prices surged for advanced-stage RE projects.

Turbulent times for Lynas

May 17th, 2019

Rare earths provide a cautionary tale about supply chain weaknesses

by Greg Klein | Updated May 21, 2019

Rare earths provide a cautionary tale about supply chain weaknesses

One of the world’s biggest supplies of magnet metals
undergoes separation at Lynas’ Malaysian facility. (Photo: Lynas Corp)

 

Update: On August 15 the Malaysian government granted Lynas a six-month licence extension. Read more.

 

How often does an investor presentation draw such keen interest from non-investors?

No doubt representatives from a number of governments and industries watched intensely on May 21 as Lynas CEO/managing director Amanda Lacaze accentuated her company’s “will to win.” Lynas has plans in place and funding en route to overcome what previously appeared to be an unattainable ultimatum. Far from becoming a takeover target, let alone a jurisdictional fatality, the miner expects to continue building a rare earths supply chain “focused on rest-of-the-world markets, that is non-Chinese markets.”

That was her message, and if stirring delivery could convince listeners, Lacaze made her case. But insufficient details cast a pall of uncertainty. Clearly the company can’t meet a September 2 deadline to remove over 450,000 tonnes of radioactive waste from Malaysia and thereby avert a processing plant shutdown in that country which would render useless the company’s Mount Weld mine in Western Australia.

Rare earths provide a cautionary tale about supply chain weaknesses

One of the world’s richest rare earths deposits, Mount Weld boasts reserves expected to give over 25 additional years of production at 22,000 tonnes of rare earth oxides annually. Included is an especially bountiful distribution of the magnet metals neodymium and praseodymium. Lynas concentrates ore in WA before shipping material to Malaysia for refining and separation. But while rare earths metallurgy has stymied some other non-Chinese operations, this facility has operated successfully since 2012.

At least it did so under Malaysia’s previous government. Its first electoral defeat since the country’s 1957 independence brought to office a party long opposed to Lynas’ operation in Kuantan. Concerns about waste containing thorium and uranium brought to mind a Malaysian RE refinery operated by Mitsubishi up to 1992. The plant closed down after an increase in leukemia and birth defects that critics attributed to the operation’s waste.

Following an environmental review of Lynas’ facility late last year, the new government delivered two formidable demands: Ensure that all material brought into the country has been rendered non-radioactive. And remove seven years of accumulated radioactive tailings from the country by September 2. Failure to do so will shut down the plant, the government warned.

An enormous logistical problem notwithstanding, Lacaze and her “dream team” told investors they have solutions backed by a AU$500-million “capital envelope” from senior lender Japan Australia Rare Earths (JARE) and the Japanese trading company Sojitz Corp.

“Of course we cannot do this on the smell of an oily rag, much as we might like to,” Lacaze acknowledged.

Rare earths provide a cautionary tale about supply chain weaknesses

Lynas managing director Dato’ Mashal Ahmad at the
podium, CEO Amanda Lacaze holding the microphone
at the company’s May 21 shareholder presentation.

A new cracking and leaching plant to be built in WA would “detox” Mount Weld material. Plans to pour money into Malaysia to upgrade the company’s Kuantan facility also sounded an optimistic note. But accumulated waste remains troublesome.

As managing director Dato’ Mashal Ahmad explained, the company will counter the ultimatum by asking the government to choose one of two options: Allow Lynas to treat the waste by producing a type of fertilizer, or allow Lynas to build another waste depository in Malaysia. The company already has four years of research backing Option 1. As for Option 2, “which Lynas is prepared to do anytime,” the company has already chosen three potential sites.

To those skeptical that Malaysia would accept the proposals, Ahmad said the environmental review, which hasn’t been officially translated, pronounced the Kuantan operation safe. Politicians, not the report’s authors, issued the ultimatum, he maintained. Discussions with the government continue and another decision will come from the entire government, not individual politicians, Lacaze added. Based on what she termed “relatively constructive” public comments from Prime Minister Mahathir Mohamad, she expressed “confidence in the outcome.”

An entirely different possibility for Lynas arose last March when Wesfarmers launched a AU$1.5-billion bid for the miner. One of Australia’s largest listed companies and a multi-billion-dollar conglomerate with interests including chemicals, energy, fertilizers and industrial products, Wesfarmers imposed a daunting condition: Kuantan must retain a valid permit for a “satisfactory period following completion of the transaction.” 

Lynas spurned the offer, provoking talk from Wesfarmers of going hostile. Undeterred, and the day before proclaiming its “will to win,” Lynas joined one of its customers, downstream rare earths processor Blue Line Corp, to announce a memorandum of understanding to build an RE separation plant in Texas. The proposed joint venture “would be the only large-scale producer of separated medium and heavy rare earth products in the world outside of China,” the companies stated.

Of course the Blue Line MOU lacks certainty, as does the strategy of presenting options in the face of a government ultimatum. $500 million isn’t all that much. To industry observers, the predicament once again emphasizes the need to create non-Chinese supply chains.

Rare earths provide a cautionary tale about supply chain weaknesses

A founding principal of Technology Metals
Research LLC and a senior fellow at the
Institute for Analysis of Global Security,
Jack Lifton has over 55 years’ experience
with technology metals.

Speaking with ResourceClips.com the week before Lynas’ May 20-21 announcements, Jack Lifton discussed the urgency of addressing critical minerals challenges.

A chemist specializing in metallurgy, a consultant, author and lecturer focusing on rare earths, lithium and other essentials that he labels “technology metals,” Lifton was one of four scientists hired by the previous Malaysian government to evaluate the Kuantan facility prior to its initial permit.

Wesfarmers “would have the money and the time” to solve Lynas’ problems, he said. “A $38-billion company can spend a year fixing problems and stay in business. If Lynas were shut down for a year, I think that would be the end of it.”

Earlier this month Wesfarmers offered AU$776 million for ASX-listed Kidman Resources, which shares a 50/50 JV with Sociedad Quimica y Minera de Chile SA (SQM) on the advanced-stage Mount Holland lithium project in Western Australia.

“Wesfarmers clearly knows all the problems with Lynas but they’re still interested in buying it,” Lifton pointed out.

The possibility of a Chinese buy-out, on the other hand, could meet opposition from either of two governments. Malaysia’s previous administration feared Chinese influence, Lifton says.

As for Australia, “I do not think that the government, as it will be constituted after this election, will allow the Chinese to buy what is basically the largest high-grade deposit of magnet rare earths on the planet,” he says. Even so, Chinese control could eliminate the Malaysian problem. “China has immense facilities and excess capacity for treating ore like that. They wouldn’t need the Malaysian plant, not at all.”

Control need not mean total ownership. Following Molycorp’s bankruptcy, California’s Mountain Pass mine quietly resumed production last year under MP Materials. With China’s Shenghe Rare Earth Company a minority shareholder, North America’s sole rare earths producer exports all its output to China.

Shenghe Resources comprises the world’s second-largest RE company by output. It holds a majority stake in ASX-listed Greenland Minerals, which describes its Kvanefjeld polymetallic deposit as having “potential to become the most significant Western world producer of rare earths.” Last August the companies signed an offtake MOU for the proposed mine’s total RE production.

Huatai Mining, a subsidiary of Chinese coal trader Shandong Taizhong Energy, holds 15.9% of ASX-listed Northern Minerals, which plans to become the “first significant dysprosium producer outside China” at the Browns Range project in Western Australia.

“Everything from Browns Range is now going to China for refining and use,” Lifton notes. “My understanding is that’s what’s going to happen in Greenland.”

Neither Greenland nor Northern can handle separation, he explains. “They can concentrate the ore, but where are the facilities to separate individual rare earths from the mixed concentrate? They are, today, overwhelmingly in China. The Chinese have an advantage in excess refining capacity.”

While Lifton thinks Malaysia would welcome Japanese ownership of Lynas, the Japanese no longer have processing abilities. They’re also burdened by Mitsubishi’s legacy.

“China does not, to the best of my knowledge, have ore as rich as Mount Weld. I don’t know of any other deposit on earth that’s so high-grade and well-distributed with magnet materials. So anyone who has processing would love to have that.”

If we don’t reconstitute a total American supply chain, if the Europeans don’t do the same, for the critical materials like rare earths, cobalt, lithium, we’re going to be out of luck.—Jack Lifton

Such a fate is now pure speculation but should Lynas face a Sino-scenario, it would only intensify a trend well underway, he adds. “They already have the largest RE industry on the planet and they’re buying RE, cobalt and other critical assets in Greenland, Africa, Australia, South America.

“If we don’t reconstitute a total American supply chain, if the Europeans don’t do the same, for the critical materials like rare earths, cobalt, lithium, we’re going to be out of luck. The Chinese in my opinion are already self-sufficient in rare earths, lithium and cobalt. They have mines all over the world that they own and operate, they have the bulk of chemical processing. They’re going to take care of their domestic needs first, and then if they want to export, they’ll control the price, the supply, and they do control the demand because at this time about 60% of all world metals goes to China.

“In America there’s a lot of talk now about critical minerals and some people are saying we need ‘a conversation’ on the subject. So while we think about it and have conversations, the Chinese are setting themselves up for the rest of this century.”

Senkaku II

July 23rd, 2018

How might a U.S.-China trade war affect rare earths?

 

At first glance, the rare earths aspect of the U.S.-China tariffs tussle looks like small change—a proposed 10% duty on American RE imports that might cause a smallish markup on some manufactured goods and wouldn’t necessarily apply to defence uses. But all that’s part of a much bigger battle that will probably target $250 billion of Chinese exports to the U.S. China used an incomparably smaller incident in 2010 to rationalize a ruthless sequence of rare earths trade machinations. Could something like that happen again, this time with different results?

How might a U.S.-China trade war affect rare earths?

Hostilities began earlier this month as the U.S. imposed a 25% tariff on approximately $34 billion worth of Chinese imports, with levies on another $16 billion likely to come. China retaliated with tariffs on equal amounts of American imports.

The U.S. re-retaliated with a threatened 10% on an additional $200 billion of Chinese imports in a process that would follow public consultation. The additional list includes rare earth metals along with yttrium and scandium, which are often considered REs but rate distinct categories in this case.

Last year the U.S. imported $150 million worth of 15 RE metals and compounds, up from $118 million the previous year, according to the U.S. Geological Survey. Some 78% came directly from China, with much of the rest derived from Chinese-produced concentrates. Yttrium shows a similar story, with 71% coming directly from China and nearly all the rest from Chinese concentrates. Although lacking hard numbers for scandium, the USGS states that too comes mostly from China.

Globally, China produced over 80% of world RE supply last year, but with less than 37% of the planet’s reserves.

Rare earths plus scandium comprise two of 35 mineral categories pronounced critical to the American economy and defence by Washington last May, after Donald Trump called for a “federal strategy to ensure secure and reliable supplies of critical minerals.” Now the same administration wants to slap those commodities with a 10% price hike.

And at risk of provoking powerful Chinese retaliation.

Rare earths watchers will remember the 2010 confrontation around the disputed East China Sea islands of Senkaku. The Japanese navy arrested a Chinese fishing crew captain who had twice rammed his boat against the military vessel. Within days, China banned all rare earths exports to Japan, crippling its globally important but RE-dependent manufacturers. China also imposed heavy cutbacks and duties on exports to other countries.

While some Western manufacturers relocated to China, Western resource companies strove to develop alternative supplies. Lynas Corp’s Mount Weld project in Western Australia and Molycorp’s Mountain Pass project in California both reached production in 2013. The following year the U.S. claimed victory as the World Trade Organization ordered China to drop its export restrictions on rare earths, as well as tungsten and molybdenum.

China complied with a vengeance, flooding the world with cheap RE supply. America’s WTO victory proved Pyrrhic as a burgeoning non-Chinese supply chain failed to compete. The most salient casualty was Mountain Pass, which went on care and maintenance in 2015.

So does China have more rare earths machinations in mind, this time responding not to a minor territorial dispute but tariffs affecting $250 billion of Chinese exports?

Maybe, but different circumstances might bring a different outcome. Since the Senkaku-induced RE crisis, advanced-stage projects have developed potential mines outside China. Work has progressed on non-Chinese supply chains, working to eliminate that country’s near-monopoly on processing expertise. Most recently, the U.S. has begun an official critical minerals policy to encourage development of supplies and supply chains in domestic and allied sources.

Of course any future scenario remains speculative. But this time the West might be better prepared for China’s tactics. Any new export restrictions might spur development of the deposits that now exist outside China. Any Chinese attempts to dump cheap supply could face further, far more punishing tariffs. While some other industries might suffer in the shorter term, Western resource companies might welcome Senkaku II.

Double discovery

November 18th, 2017

The USGS reports new American uranium potential and a new uranium “species”

by Greg Klein

The USGS reports new American uranium potential and a new uranium “species”

The Southern High Plains of Texas, New Mexico and Oklahoma
might someday boost U.S. domestic uranium supply.
(Photo: Public domain)

 

The dream of discovery must motivate many a geologist. Through skill, effort and luck they hope to eventually find something precious, useful or otherwise valuable—something well known yet found in a previously unknown location. But a group of geo-boffins from the U.S. Geological Survey not only identified a type of uranium deposit previously unknown to their country, they discovered a new mineral.

It’s finchite, “a new uranium mineral species,” as a press release described it last week. The discovery actually dates to 2015, says Brad Van Gosen, the USGS scientist who did the discovering.

While surveying a Texas cotton ranch Van Gosen collected samples of what he and his colleagues thought was carnotite, “a pretty common yellow, near-surface uranium mineral.” Back in the lab, he put it under a scanning electron microscope, which kept showing strontium with the uranium and vanadium, he recalls. To a geologist, it was unusual—very unusual. A eureka moment was looming.

The USGS reports new American uranium potential and a new uranium “species”

First to recognize the new mineral finchite, USGS scientist
Brad Van Gosen examines rock layers in Texas.
(Photo: Susan Hall/USGS, public domain)

“We looked it up and there’d been no strontium-uranium mineral ever reported before. So [team leader Susan Hall] worked with a crystallography/mineralogy lab that specializes in micro-analysis up at Notre Dame and they concluded, ‘By gosh you’re right.’” Further study continued before sending the evidence to the International Mineralogical Association. “They’re the high council and they blessed it as a new mineral.” Finchite’s moniker honours the late Warren Finch, a USGS uranium expert.

Another major finding was that the uranium was hosted in calcrete rock formations, a style of deposit known elsewhere but reported for the first time in the U.S.

Some previously secret info led to the twin epiphanies. Hall, as leader of a project that’s reassessing national uranium resources, gained privy to some unpublished 1970s and ’80s data from the former Kerr-McGee company. Included were estimates for two deposits, Sulphur Springs Draw and Buffalo Draw, with marginal grades of 0.04% and 0.05% U3O8 respectively. Together they held an estimated 2.6 million pounds U3O8.

(Of course data from historic sources and the U.S. government agency falls outside the framework of NI 43-101 regulations.)

The newly transpired, near-surface deposits led Hall and her group to the Southern High Plains spanning parts of Texas, New Mexico and Oklahoma. It was there that they recognized calcrete, its first known manifestation in the U.S.

The USGS reports new American uranium potential and a new uranium “species”

Surface showings of yellow finchite might have previously
been mistaken for sulphur, says Van Gosen.
(Photo: Susan Hall/USGS, public domain)

The stuff’s associated with uranium in other countries. Among major calcrete-style deposits listed by the World Nuclear Association are Yeelirrie in Western Australia, along with Trekkopje and Langer Heinrich in Namibia. Yeelirrie is a potential open pit held by a Cameco Corp TSX:CCO subsidiary and averaging 0.16% U3O8. Trekkopje, a potential open pit majority-held by AREVA Resources, averages 0.01%. Langer Heinrich, an open pit mine operated on behalf of Paladin Energy, the majority owner now under administrative control, averages 0.052%.

According to the USGS, grades for potential Southern High Plains deposits range from 0.012% to 0.067%, with a median 0.034% U3O8. Gross tonnage estimates range from 200,000 to 52 million tonnes, with a median 8.4 million tonnes. Together, the region’s calcrete-style potential comes to 39.9 million pounds U3O8.

But that’s a regional assessment, not a resource estimate, reflecting how USGS methodology contrasts with that of exploration companies. The agency uses a three-part approach, explains Mark Mihalasky, who co-ordinated the assessment. The procedure first delineates areas that would allow the occurrence of a particular kind of deposit. Using additional geoscientific evidence, the agency estimates how many deposits might be awaiting discovery. How much those potential deposits hold can be estimated through comparisons with similar known deposits around the world.

Mineral assessment and mineral exploration are two different things…. It’s not a ‘drill here’ assessment.—Mark Mihalasky

“Mineral assessment and mineral exploration are two different things,” Mihalasky emphasizes. “The purpose of our assessment is to help land planners, decision-makers and people in the region get an idea of what could be there, based upon probability. It’s not a ‘drill here’ assessment.

“This whole region is a relatively newly recognized area of potential and while we’re not saying this is a new uranium province we are saying there’s something here that hasn’t been found before in the United States and this might be worth looking into in greater detail if you’re an exploration company.”

Already one company from Australia has been asking “lots of questions,” says Van Gosen. Although most uranium mining in the American west uses in-situ recovery, the shallow depth and soft host rock of the Southern High Plains could present open pit opportunities “assuming uranium prices and other factors are favourable.”

Any positive price assumption will have to wait, however. One week earlier Cameco announced the impending suspension of its high-grade McArthur River mine and Key Lake mill in Saskatchewan’s Athabasca Basin. The company said that long-term contracts had shielded it from uranium’s post-Fukushima plunge of over 70%, but those contracts are now expiring. Cameco had previously suspended its Rabbit Lake mine and reduced production at its American operations.

But while production faces cutbacks, controversy over American dependence on foreign uranium flared up again last month with renewed questions about the sale of Uranium One to Russia’s state-owned Rosatom. The formerly TSX-listed Uranium One holds American resources that could potentially produce up to 1,400 tonnes of uranium annually, according to the WNA. But last year the company’s sole U.S. operation, the Willow Creek ISR mine, produced just 23 tonnes of the country’s total output of 1,126 tonnes.

As the world’s largest consumer of uranium for energy, the U.S. relies on nukes for about 19% of the country’s electricity, according to USGS numbers. Only 11% of last year’s uranium purchases came from domestic sources.

Update: The full USGS report is now available here.

USGS reports new domestic uranium potential and new uranium “species”

November 14th, 2017

This story has been expanded and moved here.