EDITOR: | September 11th, 2018 | 5 Comments

Nic Earner on the US Defense Act and our dependence on Chinese rare earths

| September 11, 2018 | 5 Comments
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“We do have the heavy rare earths, terbium, dysprosium, which others do not apart from Northern Minerals now at their pilot plant. We have a very good mix of the magnet rare earths and the heavy magnet rare earths. Then, of course, we have 40% of revenue coming from zirconium, a lot of uses there, 10% of our revenue coming from hafnium, which is an emerging technology metal. We see people using it in the light generation phone chips. Then we have 20% come from niobium. Certainly we would be one of the largest complexes and revenue generators. That is nearly US$500 million of revenue a year.” states Nic Earner, Managing Director of Alkane Resources Ltd. (ASX: ALK | OTCQX: ANLKY), in an interview with InvestorIntel Corp. CEO Tracy Weslosky.

Tracy Weslosky: Nic we are so delighted to have you. We really want to talk to you and get right into this U.S. Defense Act and how this might affect shareholders for Alkane Resources, as you are clearly the frontrunner for supply for magnet materials worldwide.

Nic Earner: Thanks Tracy. We are really hoping that this provides a catalyst to get Western companies, particularly those that want to supply U.S. Defense contracts, moving and motivated to shore up their supply chain. If you look at this act what it is saying is the U.S. will only or wants its contractors to only buy magnets from allied countries so this excludes buying magnets out of China and Russia. It not must happen immediately today because we all know the capacity for that to actually happen does not exist. It is saying, put your best foot forward, best endeavors. This is where the U.S. government is moving. These companies have to act if they want to make that regulation now or into the future.

Tracy Weslosky: We have been talking and discussing sustainability for a number of years so we were delighted to see that the U.S. is putting a good foot forward. Of course, they do not have the supply. Let us talk about your timeline for getting to production. If I understand this correctly, and please do correct me, when you guys are in full production you will have the largest supply chain for magnet and battery materials in the world outside of China. Is that correct?

Nic Earner: I would like to think so, but no. Lynas will still be number one in that. If you look at Lynas’ neodymium and praseodymium production, with their next program they are moving towards 6,000 tons per annum, which would put them at about 15% to 20% of the magnet market. That is as it stands today not in expanded demand. We in vanadium and praseodymium would be doing 1,200 tons. We do have the heavy rare earths, terbium, dysprosium, which others do not apart from Northern Minerals now at their pilot plant. We have a very good mix of the magnet rare earths and the heavy magnet rare earths. Then, of course, we have 40% of revenue coming from zirconium, a lot of uses there, 10% of our revenue coming from hafnium, which is an emerging technology metal. We see people using it in the light generation phone chips. Then we have 20% come from niobium. Certainly we would be one of the largest complexes and revenue generators. That is nearly US$500 million of revenue a year. That is a substantial revenue base, but we would be definitely one of the frontrunners absolutely. More importantly we do not have offtake into China or a large Chinese shareholding either, which really means we can tick the U.S. Defense boxes.

Tracy Weslosky: I am still certain that most of the investors out there may not be clear on how unique this critical material market is. Now I was reading in your quarterly activities report that your project, your Dubbo Project that we are referencing, could generate $4.7 billion free cash flow at the 20-year base case…to access the complete interview, click here

Disclaimer: Alkane Resources Ltd. is an advertorial member of InvestorIntel Corp.


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

  • Tracy

    I have been beating this drum since 2008 and I interviewed Don Bubar of Avalon Advanced Materials. Substantial leaders in this community such as ALKANE should be reviewed carefully as there is a lot of wisdom here — not to mention some proverbial ‘writing on the wall’.

    September 11, 2018 - 8:45 AM

  • asrms

    I agree, there is still a major lack of investor awareness and confidence re., the importance of REE’s in the green development. There is still fear out there stemming from the 2011 REE pricing debacle. 2020 is the approx date given for a noticeable EV takeoff when supply and demand will visibly clash.
    So present REE investors will have to live with the lack of interest in their companies, or suffer the pain as with e.g. Lynas till we reach that much clearer picture of REE need for the future.

    September 11, 2018 - 10:18 AM

  • reejoey

    The US/China trade war is about to kick into higher gear as the US looks at charging and freezing assets of those Chinese in charge of persecuting Muslims in western China (Xinjiang). China will retaliate–will they embargo rare earths as the did with Japan when they had a serious dispute with Japan 10 years ago? They already have shown they are ready and willing to use rare earth exports as a weapon to get their way. Expect, finally, a US government program to develop a fully integrated US rare earths industry. In case people aren’t aware of the fact, Australia is a different country than the United States–LOL. No need to go to Australia, which would get none of the US government support. One US rare earths miner to take a look is Rare Element Resources (REEMF). Such a government program is all it would take to get this Wyoming rare earth resource racing toward production. Don’t look for anything from the old Molycorp operation in CA–it is owned by the CHINESE. And that Texas rare earths hopeful has an ore with a much rare earth in it as the dirt in your backyard.

    September 11, 2018 - 3:50 PM

  • Tim Ainsworth

    Nic’s got a little confused there, LynasNext NdPr target is 600t per month or 7200tpa, with a resource that can clearly support further expansion to mkt demand.

    Second largest global producer, more importantly, by far the largest producer to free mkts, with Nth RE directing +80% of their production downstream to in-house metal/mag makers. That may move even closer to 100% with a new 30ktpa metals plant recently announced, 15ktpa start up 2019.

    http://newmat.chinaiol.com/xtcl/s/0906/47201124.html

    Already drawn in a German PMM manufacturer, exactly the type of project US should be sponsoring, rather than scrabbling in coal ash & oil sludge.

    September 11, 2018 - 10:28 PM

    • Tracy Weslosky

      Always happy for you to share your significant depth of study on this market, but Lynas (or so I understand) is weak on the ‘heavies’. Will call George Bauk and get his feedback….or course, we always have Professor Kingsnorth. My personal favorite authority on the REAL facts on HREEs and global supply…Ian Chalmers of ALKANE

      September 14, 2018 - 11:44 AM

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