EDITOR: | March 25th, 2020 | 14 Comments

Jack Lifton on the biggest move by the US Federal Government in the rare earths space

| March 25, 2020 | 14 Comments
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“What has happened finally with the US government is that they have recognized the supply chain problem and that we have been too dependent on China for too many things. The two things that are mentioned the most inside the Federal government are pharmaceuticals and rare earths… Rare earths are very much on the radar of the US federal government. In fact, one of our senators, Senator Rubio of Florida is a champion in the US to revive the rare earth supply chain. It is very exciting and it is the biggest move in this commodity that I have seen from the US government.” States critical materials expert Jack Lifton, in an interview with InvestorIntel’s Tracy Weslosky.

Jack went on to say that we should look at the total rare earths supply chain and then try to make that domestic in North America (The US and Canada) or with closest allies like Australia. Jack continued, “The anchor of any supply chain is the mine, the source of the minerals. We have got several in North America and we have 2 or 3 close to production. In Australia, we have two in operation – Lynas and Northern Minerals. The next step is separating these materials. The mixed rare earths into individual rare earths that can be further processed into products that we actually use.”

Jack also said that there is no heavy rare earth separation operation outside of China and if we consider health and safety requirements of North America then Chinese materials will be unacceptable.

To access the complete interview, click here


Raj Shah

Editor:

Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>


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Comments

  • Joe O

    So Jack,
    When would u expect that IBAS funding to be announced?

    March 25, 2020 - 6:08 PM

    • Jack Lifton

      Due to the coronavirus shutdown I cannot get an answer

      March 26, 2020 - 12:09 PM

  • Rare Earths Investor

    Thank you for the interview. I was very interested by the comment about there being 4 or 5 other (I am assuming processing project) proposals underway in the US. This assumption is made as the comment appeared linked to the cited Lynas Blue Line processing project as an example of one possible supplier within the proposed new US rare earths chain. Maybe JL could comment on the knowledges/skill that Lynas does or does not possess re., HRE production capability. The CEO has said that Lynas has such HRE processing knowledge already, but they haven’t demonstrated this yet.

    In fact, how many processors will the US need? Is the US thinking, now with all the devastation we are presently going through about internal RE/related supply now going beyond just their military needs (if more manufacturing is really going to be brought back to the ROW)?

    I am sure there will be no major problem re., mining materials, so naturally the choke will be the processing. Also, magnet production with the patent problems will be another interesting problem for the US to deal with within such a potential chain.

    Again, I have made the point elsewhere re., politics/environment of why I think this has all got to be underway in the US in 2020, because of potential later 2021 on permitting problems; others disagree this will be a concern.

    March 26, 2020 - 7:01 AM

    • Jack Lifton

      Rare Earths’ Investor,
      The needs of the US Dept of Defense, the DoD, for rare earth permanent magnets is relatively small, compared to the consumer products’ industries demand, and the DoD needs a large variety of part numbers most of which have small demands (by numbers required). This has been the kiss of death for the D0D’s attempt to source domestically. No existing domestic magnet producer is able to economically produce such short runs of widely different useage specifications. The consumer products industry uses up to 10 times as much tonnage of rare earth permanent magnets as the DoD, but, just as with the DoD, these magnets are already part of components and assemblies when they reach the final product assembly points. Before anyone even considers making rare earth permanent magnets again in the USA they must coordinate with the next downstream supplier in the chain to make sure that they have a customer. That next customer in the chain is not the DoD or, for example, an automobile or cell phone maker. It is a component manufacturer, and they are today, almost without exception, in southeast Asia, mainly China! The US Government needs to invoke Title 7 of the Defense Production Act, the creation of a board of industrial specialist to address and solve a problem with supply.

      March 26, 2020 - 6:42 PM

      • DH

        > This has been the kiss of death for the D0D’s attempt to source domestically. No existing domestic magnet producer is able to economically produce such short runs of widely different useage specifications.

        3D Additive manufacturing(AM) has been making tremendous advances for metallic parts in the last several decades. I wouldn’t be surprised that 3D AM currently could excel at short run prototype development for unique parts. 3D AM could possibly fabricate any unique magnet shape as needed, although I am not aware of any effort at this time, it would not surprise me it is in development.
        DH

        March 27, 2020 - 5:33 PM

        • Jack Lifton

          DH,
          I could not agree with you more. The problem with 3d printing of rare earth permanent magnets is that rare earth magnet alloy powders are very reactive with (damp) air. This is why rare earth magnet alloy powders are handled in an inert dry atmosphere or in vacuum. However, having said that, I think you have an excellent idea to make the short run/one off problem manageable. If anyone who reads this and has the capability to go forward with it would like some advice, support, or active participation by me in such a project please contact me through Investorintel’s website.

          March 27, 2020 - 6:09 PM

  • Letter to the Publisher

    Excerpt: “Jack, again you are spot on regarding your profound comments about single sourcing and the health and safety issues in China. I to totally agree with these cost issues you brought to light in this interview. I look forward to the next InvestorIntel interview, with you and Tracy, next week.

    If I can be so bold as to add one example (of many) to your comment regarding health and safety within China, relates to how the by product of sodium silicate “liquid glass” was disposed of after cracking zircon. The cracking process, used in China, generates a liquid glass solution which has a very high pH value. Of course this solution would also contain “NORM” from the zircon. Once the sodium silicate solution is generated, a truck from the municipal water treatment facility would load the truck and take the solution to the water treatment plant. This high pH solution would then be used to adjust the pH of the water prior to being treated and/or shipped out for use in the city. Any solids produced would then be shipped to a cement plant for further use.

    The point of this is, the NORM is now spread throughout their society either in the water for consumption or in the cement used to build various structures. Of course North America would NEVER allow this to happen. But, just like you said Jack, we are willing to buy the cheapest materials. I know you all can take this further.

    Again Jack, it is great that you and Tracy are bringing this double standard to light!”

    March 26, 2020 - 6:56 PM

    • Jack Lifton

      The readers need to know that NORM stands for “naturally occurring radioactive materials.” The costs accruing from the cleanup of a “spill” of NORM residues at Molycorp in 1998 were a principal cause of the company’s shutdown of its mining operations at that time. Note well that no such restrictions or even oversight of any kind were ever placed by the USA on Chinese operations. We do NOT know what the Chinese do with these toxic residues.
      Note also that MP, which bought the Mountain Pass mine from the bankruptcy mines and ships 50,000 tons of ore concentrates, annually, today from Mountain Pass to the processing facilities of Shenghe Resources in China. What happens to the thorium, radium, radon and uranium in the ore? Is it removed at Mountain Pass for the citizens of California to enjoy, or does it go to China to disappear? Do the US or California (progressive) governments even care now what happens to it? As is frequently said its a good thing that regulators have double standards or they’d have no standards at all. If I’m wrong will somebody please tell me where my facts are in error?

      March 27, 2020 - 9:48 AM

  • Brad Gary

    If ore is not easily obtained locally, how about DRC who are very keen on development?
    Have a look at ASX/PM8, as the shares are dirt [excuse pun] cheap at the moment for a Tier-1 near surface resource with access, water and power.

    March 26, 2020 - 10:57 PM

  • Refaat Sawires , NYC USA

    If Rare earth is so valuable and needed ,
    If China does not have much surplus to export especially after corona virus affected the production was affected by Coronavirus.
    So why Lynas Corp stock price is trading at $08.
    Why the aspiring Australia company
    Arafura ( Asx – ARU ) is traded at 4 cents?
    I am puzzled.
    Hope get an explanation from the experts.
    Thank you.

    March 27, 2020 - 8:52 PM

    • Refaat Sawires

      If Rare earth metals is much needed,
      If China production was affected negatively by the Coronavirus,
      So why most of the miners stock are depressed.
      Lynn’s Corp @ 80. Cents.
      An Aspiring Australian co
      Arafura – ASX ARU is traded at 5. Cents?
      I am puzzled!
      I hope I get an explanation from the Experts.
      Thank you.

      March 27, 2020 - 9:37 PM

    • Don

      Refaat, I feel the same way, Search Minerals has a excellent rare earth project but there shares price is only 3 cents. Something Seriously Wrong. If rare earths is so valuable than why haven’t some ,Big Wig , End User, Supplier , Etc , in North America or Europe stepped up to the plate and take some of these rare earth projects of the ground.

      March 27, 2020 - 10:42 PM

  • Jack Lifton

    Why are the shares of non-Chinese rare earth miners as well as some good juniors priced so low is the core question being asked above. The answer is (always) economics. Lynas, for example, is the non Chinese world’s largest producer of (light) rare earths. Even so it has a very ambitious expansion and remediation program announced. One which will cost hundreds of millions of dollars. The problem is that it has not shown institutional finance that it can generate enough profit over the next few years to fund the program. In addition the global junior mining share market has been depressed for the last year by a general lack of interest. For Arafura the problem is worse. It will need a billion dollars to develop its deposit into a mine. Then it will need to build or partner with a processing operation to separate its mixed concentrate. Before it can sell any rare earths it has to prove it can produce them continuously. Thus the first ton sold will have a cost of one billion dollars. No private investors today will risk such a sum for an unknown payout many years hence. Many ask why the big miners, Rio Tinto, BHP, and Vale, for example do not enter the rare earth business. Its simple really. There’s not enough return on their capital to tie it up in such a small volume commodity. In order for the non Chinese rare earth supply chains to revive it will be necessary for buyers to make firm orders on a cost-plus basis upon delivery. Only governments can make such commitments, and only if and when they do will private equity consider such investments as they will then have guaranteed returns. Investors in rare earth ventures whether producing now or juniors need to look for the lowest cost producers with the best grades and distributions. I do not think that the Chinese are today the lowest cost producers unless you do not capitalize health, safety, and environmental management. If in fact the Chinese are the lowest cost producers why then are they buying the total output of the Mountain Pass mine (now MP, formerly Molycorp); the total output of all the mines in Myanmar; everything produced in Burundi by Rainbow, and all the monazite that the Russians will sell them?
    I do like Search Minerals, by the way, and I think its undervalued.

    March 27, 2020 - 11:41 PM

  • Rare Earths Investor

    JL – Thank you for the detailed macro response. I think that the Chinese may also be buying up most of the rare earth material globally for the point you make re., financier questions. Why would financiers look to fund more mines or particularly processing, as presently almost all roads lie through China? The Chinese catering to all ‘this stuff’ makes the funders ask themselves that exact question why put cash into such projects when presently the Chinese have it all covered and basically control the sector? Yes, any future ROW chain moves will have to be coordinated/ sponsored/guaranteed by governments.

    Relatedly, the point you make about where is all the ‘waste’ going and why isn’t this question being asked more vigorously is vital? Again, I would make the point I have made in the past. It does matter from a metals investor perspective who is in the US office. Trump has reduced EPA requirements these last 4 years. However, if the Democrats take office you can almost guarantee that there will be a profound change in attitude. Biden/Sanders will be beholding to their left and permitting of ‘perceived’ hazardous mines/processors will be ‘buried’ (at best for an unknown time for ‘review’). Even the DoD will have minimal sway on preventing the ‘new’ left agenda (as shown by military budgets over the last two decades). Therefore, any strategic moves should IMHO see permits granted and spades in action within 2020. Further, US admin’ moves in MO also will impact ROW mine/processing emergence (i.e., Canada and AUS). Without such ROW moves IMO there will be relatively little for RE investors to smile about in the 2020s unless we get another impactful Black Swan (please no more).
    GLTA

    March 28, 2020 - 8:38 AM

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