EDITOR: | January 23rd, 2021 | 22 Comments

Lifton on Biden and the security of supply of rare earths

| January 23, 2021 | 22 Comments
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The Washington bureaucracy has injected politics into the issue of obtaining a secure supply of critical materials. The first shots were fired immediately after the inauguration of the new American president. To ensure that the monetary awards would not be seen to be supporting the policies of former President Trump, the permanent civil servants in the Pentagon and the Department of Energy announced within 24 hours of the new president’s inauguration that $30 million of Defense Department money would be granted to Australia’s Lynas Rare Earths. The company also agreed to match those funds to construct a 5,000 ton per annum light rare earth separation plant at a site in Hondo, Texas, operated by its American partner, Blue Line Chemical.

It should be noted that a separate grant of $500,000 had already been awarded to the Lynas/Blue Line joint venture to design a heavy rare earth separation facility with a further grant of $500,000 awarded to MP Materials also to design a heavy rare earth separation plant.

These second grants were part of a U.S. Army (Department of Defense) initiative called “The Cornerstone Project.” Cornerstone awards were Phase I, which in bureaucracy speak, means that the big money will be in Phase 2 and that only one of the recipients of the Phase I money will get Phase II money supposedly to build a heavy rare earth separation facility.

There is little cooperation between the Departments of Defense and Energy with regard to the security of supply of rare earths.

At the same time as the awards by the Department of Defense were made the Department of Energy also announced an award of $22 million to Rare Element Resources (RER) to be matched by the same amount from RER’s largest shareholder, General Atomics (GA), a prime military contractor. The purpose of this award was to determine if there are alternative downstream (of mining) processing regimes as compared to the traditional ones, so that a globally competitive American rare earth industry can be achieved.

In the case of RER it may be that a full scale solvent extraction plant will ultimately be constructed using the R&D work done by RER, before GA bought into it. A pilot plant was built in Germany by a GA subsidiary to prove out the efficacy of the solvent extraction system using RER ore (bastnaesite) from its Bear Lodge deposit in Wyoming. The development of a mine at Bear Lodge, however, is estimated to require at least $350 million more.

Lynas faces the hurdle of mining the monazite feedstock for the Texas plant in Australia and then, also in Australia, removing the uranium and thorium from the ore before a concentrate is shipped from Australia to Texas. The ore would be mined at Lynas’ Mt Weld property, which now supplies an ore processing plant in Malaysia – Lynas has agreed to restrict to radioactinide-free feedstocks by 2023. A significant cost will be incurred by Lynas in duplicating the ore processing plant now in Malaysia, estimated at some $500 million, according to the company. In addition, the freight cost from Australia to the USA (a Texas Gulf Port) will be significant. The Lynas ore processing/solvent extraction plant in Australia cost more than (U.S.) $800 million with capacity of 22,000 tpa of TREO. To construct a 5,000 tpa plant in Texas for $60 million will be a challenge to Lynas, especially as it has also proposed to the U.S. DoD that it will build additionally a heavy rare earth separation facility at the same location.

The commercial production of actinide free mixed rare earth carbonates will begin at the White Mesa Mill operations of Utah’s Energy Fuels in March. It is expected that 200 tons per month of the concentrate will be offered into the market beginning in Q2 of this year. I hope that the Defense Department might consider buying this material, since comparable material is not expected to be available from either MP Materials or Lynas for several years! White Mesa will be processing monazite derived from the heavy mineral sands operations in Georgia of American owned and operated Chemours, which processes the mineral sands to extract zircon and the titanium mineral, ilmenite.


Editor:

Jack Lifton is the CEO of Jack Lifton, LLC and is a consultant, author, and lecturer on the market fundamentals of technology metals. “Technology metals” ... <Read more about Jack Lifton>


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Comments

  • GreatWA

    Consider the science and tech co-operation previously by ANSTO in Australia and now between Korea and ASX: ASM already producing tangible results.

    January 23, 2021 - 11:36 PM

    • Jack Lifton

      Great WA,

      Tech bureaucrats are no different from policy bureaucrats. Their job is to get projects to attract funding and then to expand their bureaucracy. ANSTO cannot fund mines, refineries, or fabricators. It can only say that the science/engineering is sound. It is the same in Korea or the USA.

      Jack

      January 24, 2021 - 9:38 AM

  • Rare Earths Investor

    Thank you for your comments. You clearly have more access than I do to the ‘ins’ around RE and US politics. I would humbly suggest, however, that politics were injected into the US RE sector issue will before the inauguration/election with 2020 led RE sector Republican Senator moves (i.e., Murkowski, Rubio, Cruz, etc).

    Therefore, it’s an interesting idea that the ‘civil servants’ did not want this new award money to look like it came from the past Republican regime. Does this suggest a desire by those permanent bureaucrats (and military) to try and imply that the Biden Admin’ already supports such new RE mining and processing; beyond the much-touted ‘private’ conversations? Maybe the implication is that these awards are the Democrat Admin’ now in action within the US RE sector?

    Yet, I wonder; in particular, looking at Biden’s very first action killing off the XL pipeline. Also, the push back Energy Fuels has received from environmentalists on their recent Uranium approach (inc., waste from outside borders) and now they’re taking up the RE issue (especially from indigenous opposition). Now factor in the RER location at Bear Lodge and its environmental question.

    Plus, the Democrats have not even started to look at any environmental issues (via House and Senate committees) that may be raised by ‘new’ critical metals requirements within borders. These issues will pit (Sanders, Warren, AOC, etc) left party dogma directly against the reality of new energy policy and feedstock/ processing needs. With the emphasis on climate change and new energy, these ‘debates’ are coming.

    As you rightly say the US is looking at alternative methods for RE processing but the question also arises as to how many processors will be needed by the US/CAD to satisfy their strategic needs (we are lacking clarity re., any future N. American commercial needs)? Lynas/ BL, MP Mats, Energy Fuels and the private Rare Earth Salts (plus the proposed CAD SRC processor)? I think that if processing awards do lead to future Biden Admin’ support, then this will be reflected (as you suggest re., HRE processing) in fewer rather than more processing facilities.

    Thanks, as usual, for stimulating investor thought.

    January 24, 2021 - 9:13 AM

    • Jack Lifton

      Rare Earth Investor,

      Thanks for your detailed comments. The most I can say about the US DoD bureaucracy is that it focuses on the guns, but ignores the need for ammunition. The details required for an operational supply chain in any manufacturing industry are only learned on the job. American bureaucrats speak only to each other and to academic advisors. Neither group has much, if any, industrial experience. Thus the DoD discovered rare earth permanent magnets about 10 years ago when the Chinese took their first step in asserting control over the global rare earth industry. Now they are dribbling out (Yes, in mining, 25 million or so is a dribble!) money to those who have conned them the best by suggesting that their corner of the supply chain is all that matters. The Chinese are masters of the waiting game and of deception, but they are not at all stupid as so many American “experts” seem to believe. China is consolidating its hold globally on the rare earth supply chain while America’s DoD dribbles money out to those who make nice to it with stories that sound good.

      January 24, 2021 - 9:34 AM

    • Sam

      Remember what happens when you cross the Pentagon on matters of national security. Hint it is advised you don’t go driving around in a convertible with the top down, you may lose your head. If one looks at what rare earths are used for one will understand the DoD’s interest in it.

      January 25, 2021 - 9:44 PM

    • Rusty atwood

      There’s a new player in this! Alaska rare Earth LLC

      January 27, 2021 - 11:36 AM

  • Jim Kennedy

    Great work Jack. You may remember that the original Cornerstone grant was halted when it was pointed out that MP / Mt. Pass cannot produce commercial quantities of heavy REEs. Of course, the award was political so the question of capabilities was pushed aside. As you know, MP’s only potential source of heavy REEs is the monazite they cement in place. If they were to begin processing their monazinte they would need an actinide storage / disposal plan. Considering their history of bankruptcy I don’t see the NRC granting them any such licences.

    January 24, 2021 - 11:07 AM

    • Jack Lifton

      Jim,

      Thanks for the comment. I cannot imagine either the NRC or the People’s Republic of California granting a license to remove and store thorium and uranium from monazite to MP. At the end of Molycorp II, the Mark Smith fiasco, Molycorp was shipping radioactive residues and process water to Utah for legal disposal. I was told that the costs of this amounted to millions of dollars just in the last few months prior to bankruptcy and contributed to the bankruptcy. I await MP’s publishing of a business plan in detail. I’m not holding my breath, but luckily for MP the Wasinngton bureaucracy doesnt seem to need to breathe. I suspect also that the Fortress SPAC insiders have cashed out and departed leaving the project to the “suits” in Las Vegas.

      January 24, 2021 - 11:20 AM

  • Shenita Jones

    Info

    January 24, 2021 - 11:29 AM

  • François, REE investor

    There is an alternative to the costly traditional method of mining and extracting REE’s. As many know the downfall of Molycorp was caused by the high environmental costs of extracting REE’s in California and the choice was made to let the Chinese do it for the west at a cheaper cost. Thus letting them deal with the consequence of the heavy pollution caused by its extraction and purification. The other consequence being that they now control most of the REE market and can use this as a weapon. So, this leaves us to now with the US and it’s allies scrambling to restart a full chain of production implying billion plus investments and 2-4 years time lines to complete the infrastructures on a fast track.
    There is though , another cheaper, more ecological, and faster complementary option that is being implemented right now just north of the US border.
    The owner of Largest rare earth Bastnaesite 43-101 resource estimate in North America decided to change course in 2013 when they hired Dr. Pouya Hajiani of Laval University QC and inventor of a new cheaper and environmentally safe extraction process for REE’s from any feed source. This ISR process included being able to recycle neodymium super magnets fast and at a cheaper cost.
    So, for just a few millions in investments they built a proof-of-concept neodymium magnet recycling plant, then a pilot plant, and now they are finishing the industrial unit plant.
    Neodymium magnets are the most important part of the REE centered industry. They are found everywhere from the cellphones to the giant wind turbines. And they are expensive. So being able to recycle all of that feed outside of China does not only make sense, it is essential to all those seeking independence from the Chinese monopoly.
    Geomega (tsx:gma) has already a LOI with USA rare earths to recycle their feed , as they also have a US patent to extract REE and niobium.
    Other LOI’s and contracts are signed for the European and Japanese markets.
    In this new day and age of favoring reuse and recycling vs the waste of virgin non renewables resources, I think the new Biden administration will take a hard look at the former.

    January 24, 2021 - 2:40 PM

  • Ian Thomas

    So at the end of the day the only solution that makes sense in the short term and as an American solution is to have the White Mesa mill provide the feedstock to the Lynas facility in Texas as the White Mesa mill is licenced to process and sell the radioactive component of the monzanite feed.

    January 24, 2021 - 3:43 PM

    • Jack Lifton

      Ian,

      That’s certainly an option.

      January 24, 2021 - 5:14 PM

  • François, REE investor

    There is an alternative to the costly traditional method of mining and extracting REE’s. As many know the downfall of Molycorp was caused by the high environmental costs of extracting REE’s in California and the choice was made to let the Chinese do it for the west at a cheaper cost. Thus letting them deal with the consequence of the heavy pollution caused by its extraction and purification. The other consequence being that they now control most of the REE market and can use this as a weapon. So, this leaves us to now with the US and it’s allies scrambling to restart a full chain of production implying billion plus investments and 2-4 years time lines to complete the infrastructures on a fast track.
    There is though , another cheaper, more ecological, and faster complementary option that is being implemented right now just north of the US border.
    The owner of Largest rare earth Bastnaesite 43-101 resource estimate in North America decided to change course in 2013 when they hired Dr. Pouya Hajiani of Laval University QC and inventor of a new cheaper and environmentally safe extraction process for REE’s from any feed source. This ISR process included being able to recycle neodymium super magnets fast and at a cheaper cost.
    So, for just a few millions in investments they built a proof-of-concept neodymium magnet recycling plant, then a pilot plant, and now they are finishing the industrial unit plant.
    Neodymium magnets are the most important part of the REE centered industry. They are found everywhere from the cellphones to the giant wind turbines. And they are expensive. So being able to recycle all of that feed outside of China does not only make sense, it is essential to all those seeking independence from the Chinese monopoly.
    Geomega Ressources has already a LOI with USA rare earths to recycle their feed , as they also have a US patent to extract REE and niobium.
    Other LOI’s and contracts are signed for the European and Japanese markets.
    In this new day and age of favoring reuse and recycling vs the waste of virgin non renewables resources, I think the new Biden administration will take a hard look at the former.

    January 24, 2021 - 3:45 PM

    • Jack Lifton

      Recycling is an economics’ issue. Organizing the supply of sufficient material for the process to be profitable is a very large hurdle to overcome. In this case I’ll wait and see.

      January 24, 2021 - 5:13 PM

  • Ralph Sabean

    I think NS should set up a RARE EARTH facility to process some of our own Rare Earths. NS is known to have several deposits and a lot of Magntite a very useful ore.

    January 24, 2021 - 8:50 PM

  • Joe O

    Jack
    Hope all is well, interesting times for the sector lately for sure!
    Does reemf getting DOE funds for separation pilot eliminate tmrc chances for getting funding for their cic/cix demo plant? Ucore rapid SX is actually ahead of them both, they have a commercial demonstration plant on tap for 2021,I was hoping they would see some DOD funding for that. I know Gareth Hatch is a colleague of yours, was wondering what you though about rapid SX potential going forward compared to others being tested.

    January 25, 2021 - 9:27 PM

    • Jack Lifton

      I don’t know the answers to your questions, but I wouldn’t count anyone out based on DoE funding or lack thereof. As an ultimate customer the DoE or even the DoD represent just a fraction of total US demand for rare earth enabled products. The ultimate customers are automotive, aerospace, and appliance manufacturers. When they come to the table private equity will come with them.

      January 25, 2021 - 10:52 PM

      • Jack Lifton

        John

        My understanding is that both Lynas and MP got 500k for design work for a 5000 tpa system to separate heavy rate earths. This was Phase I. The winner of Phase I will get to submit a Phase II proposal for a full scale plant. The rare earths “experts” in DC do not seem to understand that such a capacity would essentially equal Chinas total capacity for HREEs except for yttrium.

        January 26, 2021 - 12:12 AM

  • John Kutsch

    How did you get the numbers of just $500,000 from each from Cornerstone – We had understood it to be a fund of at least $400 million. Cornerstone is an “OTA” and will never disclose what it spent exactly.

    January 26, 2021 - 12:03 AM

    • Jack Lifton

      John Kutsch
      See my answer above

      January 26, 2021 - 12:15 AM

  • Rob

    Mp materials stated that although it would be good to get government financial support, they don’t need it. They have plenty of cash on hand and are years ahead of Lynas or anyone else. Also, rare earth percentage demand for military purposes estimated at around 2% is tiny compared to the electric vehicle electric vehicle market.

    January 27, 2021 - 11:17 AM

    • Jack Lifton

      Rob,

      If, in fact, an official or official spokesman for MP said what you report then it was uninformed, and really quite stupid bravado with regard to their relative standing against Lynas. I dont know whether or not they have sufficent cash on hand to design, model,build, and operate an efficient economically and environmentally competitive separation plant of the right sixze for their projected market and market share, but if they repeat the Mark Smith megalomaniacal plan for a 20,000+ tpa behemoth then they do not have enough money on hand.
      Lynas is an operating commercial and competitve producer of individual and blended separated light rare earths. It currently operates the world’s largest SX separation plant dedicated to rare earths. The Lynas plant has a capacity of 22,000 tpa of light rare earths, and it is planned to expand it to 33,000 tpa (the modules are 5,500 tpa each, which experience has shown is the largest manageable size for such equipment. Lynas plant was basically complete by 2012-3, but it took until 2017 for full scale operation to commence. MP’s staff, Australians and Malaysians, on site is thus the most experience in the world at operating a large scale dedicated rare earth SX separation system. MP has inherited the remains of an over-engineered very large sale SX plant that never ran economically or effciently and was hobbled by maintenance and severe environmental problems especially in regard to the management of waste reagents and salt. If MP announces that it is going to scrap the Project Phoenix remains and build a new, say 10,000 tpa, system from scratch, then it might have a chance of being in the separated individual and blended light rare earths business by, say 2024. Even to do this MP would have to engage outside contractors. And, even if that were to happen, monazite is a far richer rare earth ore than bastnaesite, and Mt Weld is most likely the largest such working mine for monazite on the planet. Game, set, and match to Lynas in any contest between those two.

      January 27, 2021 - 11:46 AM

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