The Rest of the World: The Chinese Perspective on Rare Earth Supply & Demand for the next Decade, 2014-2020

Future-Rare-EarthsInvestorIntelReport Excerpt: I was in Ningbo, China, last week, a Chinese ‘town’ — the size of metro Toronto, just 3 hours by car south of Shanghai. I was an invited guest speaker at the first 2014 International Conference on NdFeB Magnets: Supply Chain, Critical Properties & Applications. There were more than 250 fully paid attendees, and there were 450 attendees, including student “guests” for the keynote speech by Professor Masato Sagawa, who led the Sumitomo team that ‘commercialized’ the sintered neodymium-iron-boron in the late 1970s.

The conference was hosted by the core groups of the Chinese rare earth permanent magnet industry and of the Chinese rare earth supply chain. The host groups from last August when I was a guest speaker in Ganzhou, the Chinese Society of Rare Earths (CSRE) and the Association of China Rare Earth Industry (ACREI) were also hosts in Ningbo. There were dozens of attendees from Chinese companies representing the entire spectrum of the Chinese total rare earth supply chain.

There were about 25 non-Chinese attendees including 6 of the 25 invited speakers.

There were highly technical presentations on specific topics, general presentations, and one or two ‘popular’ presentations for laymen. The conference languages were Chinese and English and the simultaneous translation was the best I have ever encountered.

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No such conference could be so well attended outside of China. I doubt whether a group of 50 could be assembled in the USA for such a meeting. It would be possible in Europe. So, having said all of that, was it worthwhile?

I do not believe that western capital will underwrite the development of any rare earth project for which the development of the mine exceeds USD$500,000,000.00. I also believe that no ‘region’ will see the economic development of a rare earth mine if there is not, in that region, at least the access to captive or toll downstream processing capacity to convert the ore to individual rare earth metals and alloys. This downstream capacity, particularly for separation of the mixed concentrates into individual rare earths, may be regionally pooled or even fulfilled by politically independent tolling operations. Finally it will be necessary for any and all such developments to have a credible capability to economically and legally remove and dispose of radioactive elements associated with their mineral processing.

To access this complete paper, which includes Light Rare Earths Supply, Heavy Rare Earths Supply, and the Future of the Rare Earths Market for the next decade from the Chinese perspective — including relevant facts on the rare earth permanent magnet industry, click here to log-on or click here to subscribe to the InvestorIntelReport.


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Jack Lifton

About Jack Lifton

Jack Lifton is a Founding Principal of Technology Metals Research, LLC. He is also a consultant, author, and lecturer on the market fundamentals of the technology metals, the term that he coined to describe those strategic rare metals whose electronic properties make our technological society possible. These include the rare earths, lithium and most of the rare metals. Jack Lifton is currently a non-executive Director for Texas Rare Earth Resources Corp. (OTCQX: TRER) and AMR, a private Turkish mining venture. He is a paid business operations/marketing consultant to Rare Element Resources (TSX: RES | NYSE MKT: REE), Ucore Rare Metals (TSXV: UCU | OTCQX: UURAF), Tasman Rare Metals (TSXV: TSM | NYSE MKT: TAS), and NovX21 (TSXV: NOV). He is also the founding co-principal of Technology Metals Research, LLC. His consulting is done through Jack Lifton, LLC, a consultancy he began in 1999 upon his retirement as the CEO of an OEM automotive supply company specializing in process chemistry and metals trading. Jack Lifton, LLC is a member of the Minor Metals Trade Association (www.mmta.co.uk) and Jack is an advisor to the Malaysian Academy of Science in Kuala Lumpur, and he is a member of that Academy’s Rare Earth Task Force.
  1. Sounds like the track that western South Africa is on. Mintek, Great Western, the Namaqua sands byproducts, maybe Frontier and Namibia RE, plus others. A number of proximate sources with very high concentrations of RE in monazite, established mines, in a low cost environment.

  2. Jack,
    You wrote: “…..no ‘region’ will see the economic development of a rare earth mine if there is not, in that region, at least the access to captive or toll downstream processing capacity to convert the ore to individual rare earth metals and alloys.” At a previous presentation you made in China, you suggested that either the Chinese set up duty free zones to do rare earth separation for western mines using conventional tolling arrangements or that Chinese separators set up facilities abroad to do the same regionally. My question is this: If there is a vacuum and a business opportunity for Chinese refiners to take their proprietary experience and technology abroad (if their govt. got out of the way), would not this same opportunity exist for a Solvay, who, I assume, has comparable expertise. Likewise, in the metal making and alloy manufacturing realm, would not similar opportunities exist for an LCM or other western alloy manufactures to expand into the regional supply chains as they emerge? Is that technology and expertise as proprietary and tightly held as rare earth separation?

    • I do not know of any plans by Solvay to increase its capacity at LaRochelle, France. This plant is currently underutilized, so why would they want to increase its capacity?
      As to rare earth metals manufacturing please keep in mind that LCM is small and even so underutilized and that I do not know of any other metal making capability outside of Japan with the possible exception of a very small capacity at the Santoku lab in Arizona that Molycopr bought.
      Just because the Toronto blogosphere talks incessantly about capabilities and capacities for separating rare earths and making metals and alloys doesn’t mean that such capabilities or capacities exist outside of China and Japan.
      There are currently no feedstocks being produced outside of China in enough capacity at a low enough price to entice the capital and expertise needed to build such facilities for products in demand OUTSIDE OF CHINA.
      Huge amounts of money have been wasted chasing exploration companies and now there is very little interest in actually supporting the few who might go to production with downstream facilities.
      This is the problem.

      • Jack,
        Thank you for taking the time to address my questions.

        I appreciate that nobody in the ROW is currently mining and refining commercially meaningful quantities of critical rare earths. I appreciate that Solvay is underutilized. (Witness the recent letter-of-intent they signed with Avalon, albeit with a walk-away clause should Avalon not be able to find financing — which suggests to me that Solvay may be as skeptical as you are that projects that cost over a half billion to develop can find funding.). I appreciate that LCM is currently underutilized..

        Eventually, ROW, heavy rare earth deposits with good economics will come on line. If China does not take your advice and establish free trade zones to toll separate heavy rare earths, then the ROW miners would be motivated to embrace your earlier suggestion that they form regional coops (sharing the cap-ex) to toll separate their concentrate, and turn their separated oxides into metals and alloys. This is where I saw Solvay and LCM coming into the picture because, outside of China, they have the know how.

        I appreciate that the end-users are now in China. But won’t they relocate to where they can get their needed inputs or be obliged to import.

        My flight of ideas may very well be naïve. I am a lay investor in the space who is trying to understand its prospects. Lou

      • Jack I’m hoping you can help me, in the 60s where did Steenskampskraal send their monazite concentrated for separation? Rhone-Poulenc in France comes to mind but was there not somewhere in the U.S.A. too? Thanks so much for your help, this has been very difficult to find.

    • Jack,
      I believe Solvay has every intention to fill the “vacum”.

      “La Rochelle is key site in Europe due to its solvent extraction assets
      Rhodia will restart all the existing SX batteries
      Rhodia will set up a new RE separation unit outside of China according to market needs & asset saturation”

      “Solvay La Rochelle plant is the only facility outside of China able to separate all RE including HRE.
      From 2000 and up to end of 2011, only 4 separation batteries were running over 18 existing units mainly for La and Ce purification.
      Taking into account the new needs of RE separation outside of China, in 2011 Solvay decided to restart its La Rochelle HRE separation unit
      Short term:
      From 2012 11 SX batteries are running for EOL lamps and Magnets recycling (Pr, Nd, Dy, Eu, Gd, Tb & Y)
      Medium/long term:
      From 2014 progressive restarting of all the 18th SX batteries for separation of RE from new mines outside of China”

      http://www.federchimica.it/Libraries/EVENTI_112013_18°WorkshopTACEC/Renato_Migliora_Solvay_Group.sflb.ashx

        • Solvay does NOT have a j/v with Avalon. Avalon is a non-producing junior in development. Solvay is a global chemical company with 10s of billions of dollars in sales. Solvay’s “agreement” with Avalon is that it, Solvay Rare Earth Systems, will TOLL refine (separate) Avalon’s PLS, if and when it is delivered within a reasonable time frame. Solvay is NOT INVESTING in Avalon.
          This kind of exaggeration is the real problem, because it confuses small investors.

          • If I were Solvay I would let the bidding begin. I do not know how much spare separation capacity Solvay has but there is plenty of potential concentrate.

          • Its not the bidding thats a NO GO. Its the agreement they get to keep all the critical rare earth for France.

          • The agreement is positive for Avalon’s chances of going into production. Let’s just say they’re off the short list for now.

          • Avalon does not own Canada. A junior looking to make a profit by plundering Canadian resources and pay bonuses to the CEO. Without Solvay’s technical expertise they cant design the process flow chart to create an oxide/carbonate. Forty five year old technology that may not be cost competitive.

  3. I started reading Mr Lifton’s articles and posts only recently and find them very informative. I don’t take Mr Lifton’s perspective as a God given fact however the merging of chemical engineering with business process and economy theory makes me start thinking on a different perspective.
    I find Mr Lifton’s silence on Great Western raise more questions than answers. Talking about LCM as the only metals mfg outside of China and his radical idea of central continental tolling/processing stations requires a supply chain from mining to production of metal alloy than its obvious the world needs LCM and their technology. Solvay as the only functional separator of all rare earths is in Europe. Their possible expansion is due to the Avalon agreement which I doubt whether its economically viable.
    I’ll jump though Mr Lifton’s multiple articles and posts to come up with the most obvious solution. We need a tolling plant in North America to separate the rare earths. Market failures means government must subsidize the plant until it reaches critical mass in volume processing. I would even dare say why not build it small at 200 million with expansion options.
    I’m not saying invest in unproven technology like Ucore where they haven’t finalized the process and where it works only in the Lab. Ucore needs to finalize their process and do more drilling to elevate the level of measurability of the rare earth before they can even do a feasibility study, a test plant and refine the process for an unproven technology.

    I’m simply saying build a Solvay in North America and they will come. Mr Lifton is saying the Chinese has excess capacity more than enough to process all heavies until the end but what Mr Lifton doesn’t say or even incorporate into his analysis is the downstream benefits from having a full supply chain.

    • Your solutions are for “Solvay to build” and/or the US government “to fund”…
      Corporations and governments act in their own interests, which for governments used to be for everyone’s interest. Today however that is not true of governments.
      At the moment Solvay has apparently (as indicated by its actions) decided not to build any additional refining capacity anywhere until LaRochelle is maximally utilized. The US government does not even begin to understand the problem, and even if it did, it would NOT know how to solve it. You have a US government that funds a R&D project, as if it were a commercial venture, such as Solyndra with multiples of what it would take to recreate a total US rare earth supply chain, because Solyndra came to it with POLITICAL clout. Companies that would benefit greatly from a regional rare earth separation plant are GM, Ford, GE, Boeing, Lockheed, and probably most of the top 50 of the Fortune 500. But they are COMPETITORS and, other than the OEM automotive industry, which frequently co-invest in common parts plants, they never jointly develop raw materials’s related sources. I have been trying to get the American OEM industry to form a common-interest group in the rare earths for years. Sometimes lower level procurement people have a meeting and consume donuts and coffee, but the decision makers have yet to make any decisions.
      Private equity will have to step up to do this, and it will be a 200-300 million dollar high risk investment. So far there have been no takers in the US or Europe.

      • Maybe the solution is for Innovation Metals to move to some hipster pad in San Francisco, do a partial pivot (if you don’t know what a “pivot” is, you’re so last century) and come up with some cool sexting app to complement its rare earth toll processing plans. Then the VCs and private equity firms will come a callin’ with oodles of cash to be invested. Then pivot back toward the rare earth thing, unless the company gets so enamored of the money and fame from the sexting app business.

      • I look at this as a “must” for society as a whole. Before I started reading your post I looked into the sector after 2011 and contacted the Canadian government in 2012. In your articles you stated we don’t have the technology nor the funding but have the heavy largest deposit in the world. The Canadian government started both counting inventory and promoting their “best” Canadian Rare Earth or first to market “Avalon”. The info you have in your articles comes from the declassified documents other wise you wouldn’t even know Canada had such “deposits”.
        Canada is more socialist and they recognize that heavy is critical to Canada’s future. The new Finance Minister is Joe Oliver “today” and yesterday he was the Natural Resource Minister. Can you see what I see?
        What I proposed was for Canada alone but after reading your articles I can see the need for all of us to cooperate and benefit together. The Canadian government understands and I am trying to solve the problem for all of us. I am being blocked but hopefully my message to the opposition parties will get them to see the necessity to build a Tolling Plant in Canada under 200 million. The problem is the technology which you mentioned is being developed in Quebec.
        The problem is the understanding of tolling and the different phases from an oxide/carbonate to separation. Two different stages to develop an industry while they see it as a single leap frog step.

  4. Can someone confirm these numbers on critical rare earth?
    Dy Tb Eu Nd Y
    Ucore .03 .01 0 .11 .19 material grade percent

    Ucore doesn’t have a very good heavies content?

    • Some thoughts:
      The global market for NdFeB alloys is around 80,000 metric tons per year. If GWMG made a profit from around 275 tons it looks like American magnet makers are missing the boat by not getting back into production. I understand that we are dependent on China for ferrodysprosium, and terbium for modifying NdFeB alloys, but this is where our government could make a difference by encouraging the production of Dy and Tb from RER, TRER, and Ucore, which in combination with Nd, Pr, and NdPr from Molycorp ( or whomever winds up operating Mountain Pass) will soon I think be able to match the Chinese in price.
      As I recall the target production from SKK will encompass just 34 tons of Dy per year. But I note that at even 2% Dy in NdFeB this production could support 1700 tons per year of NdFeB:Dy magnet alloy. This would give revenues today of $120,000,000 at a 25% margin. Now that would be a nice company. Yes, I know it would take a much larger facility than LCM has just built, but even so it would make LCM a serious player in the ROW.

      • Comments on your “home town” (so to speak) Great Western Technologies biting the dust? I presume this doesn’t come as too much of a shock to most people given its dismal performance and utilization, while parent Great Western has been investing in Less Common Metals.

      • Hi Jack. Here is a quote from the MD&A dated yesterday: “LCM’s total expansion plans are anticipated to reach close to 4,800 tonnes of rare earth alloys per annum at full capacity from five strip cast furnaces together with the long-established LCM melting processes.” There is a lot of room for expansion at LCM. Also, I always appreciate your sharing your knowledge and insights. Keep the faith!

      • Jack, I see GWTI ending up in the hands of SUV. There is no way that this company is going anywhere but to help promote Hoidas in the North America REE market. Jim will know exactly how this can be done. GWTI has permits and patents and alot going for them, they will not be willing to give that up so easy. I would love to hear what your thoughts are. Thanks and keep up the great work.

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