EDITOR: | April 10th, 2014 | 27 Comments

Solvay’s toll refining services redirect the downstream rare earth dream

| April 10, 2014 | 27 Comments

First Come, First Served: How much water can you pour out of an 8 ounce glass? Does that seem to be a trick question to you? It really isn’t. The answer is 8 ounces.

Jack-LiftonSo now let’s look at an analogous question: How much, in total output, of individual rare earths can Solvay’s La Rochelle, France, separation plant with a total installed output capacity of 9,000 metric tons per year process? The answer is obviously that Solvay’s LA Rochelle, France, global rare earth (a phrase I use to indicate that the plant can separate from each other and purify any and all of the rare earths plus scandium and yttrium) solvent extraction facility can process a total of 9000 metric tons per year. So why am I pointing out this obvious fact?

I believe that La Rochelle is now operating at about 50% of total capacity, so it has available the open capacity to process 4,500 tons per year. It is a very impressive operation with three stories each having some 600 mixer settler units. The last time I was there (in the Spring of 2013) around 1200 of the 1800 mixer settlers were in operation.

I am pleased that this facility has finally been “discovered” by many managers of the rare earth juniors, and I am pleased that Solvay has very recently decided to offer toll refining services to those whose metallurgy can produce a PLS that will be both legal to import into France (from a radioactive content perspective) and is amenable to the nitrate process used by Solvay, La Rochelle.

Now, back to where I started. If one assumes, for the sake of this article, that Solvay La Rochelle is now running at 50% of capacity. I then also assume that it is operating at least at or close to breakeven at that capacity utilization, and I am reasonably certain that it does not need to run at full capacity in order to be profitable. Note well that Solvay, La Rochelle is not simply a producer of separated rare earths but, in fact, supports two downstream rare earth dependent businesses in which Solvay is the world leader, the production of display and lighting phosphors, which are yttrium oxy compounds “doped” with heavy rare earths, such as, but not limited to terbium, and the production of the cerium doped alumina wash coats (24 different customer specified blends I was told)used to line the channels in the substrates for automotive exhaust emission catalysts and upon which the platinum group metal catalysts used are deposited. Solvay La Rochelle also produces and markets cerium salts used for glass “polishing.” I think that it also produces high purity lanthanum for the production of optical glass.

Solvay, La Rochelle, is therefore not just a solvent extraction operation that produces and markets individual rare earth salts and blends for use by others. It is the anchor of a totally integrated supply chain for phosphors and wash coats and fine chemicals. It is also, by the way, the world’s longest running solvent extraction plant dedicated exclusively to processing (separating and purifying) the rare earths; it has run for 44 years.

It should be clear that any rare earth junior who says he is going to build a dedicated solvent extraction plant for his own PLS is NOT going to create an operation like La Rochelle in a short time. Nor is the junior going to enter any downstream markets for high tech products even if this type of arrogantly ignorant announcement is frequently made. Alain Levesque, the scientist who was responsible for much of La Rochelle’s process chemistry development until his retirement last year (2013) told me in Toronto last year that it could take 10 years of operation before a new SX plant could routinely produce 99.99% pure individual separated rare earths. Like much of engineering trial and error is a common operation when a plant is started up. Success is a matter of luck as well as of well-honed and experienced skill.

I therefore applaud (and approve) of the recent move by many older and now wiser juniors to seek out a toll refiner. I note that the only two former juniors now in operation are vertically integrated downstream at least as far as through the separation of the light rare earths ( and in Molycorp’s case through the capability to separate heavy rare earths in their subsidiary’s Chinese facilities).

The Solvay people told me that when they announced at the Roskill Conference in Hong Kong in November of 2012 that Solvay had just then decided to look at toll refining their representatives were inundated with requests for meetings. They were surprised, I was told. I was not surprised, because I have observed the juniors walking around with blinders since the current rare earth bombast began in 2007. Most of the managers at first completely ignored the downstream aspects of rare earth production, and those that did learn of it sought out Chinese technology vendors for advice. No one ever mentioned Rhodia (bought by Solvay recently with its rare earth processing and manufacturing business renamed as Solvay Rare Earth Systems just last year, 2013), but this could have been because Rhodia’s La Rochelle and two Chinese facilities were company dedicated and not offering toll refining services.

I don’t know if Rhodia, La Rochelle, has commenced toll refining services, because none of the public or even private juniors I am aware of has commenced production of a clean PLS. By clean I mean a PLS without radioactive or nuisance elements, such as uranium, thorium, iron, aluminum, fluorine (fluoride), and the like all and each of which impair solvent extraction efficiency or even efficacy.

I suspect that La Rochelle is now being offered feed stocks from off-the-books production in southeast Asia, but even these would have to meet the no radioactives and/or nuisance standards.

In any case Solvay La Rochelle is looking for revenues from toll refining and not necessarily for feed stocks for its own downstream businesses. And even where Solvay, as any other company in its situation, would like alternative sources for ytrrium and the heavy rare earths its new demands will be relatively small, since it has been sourcing these materials for decades and in all likelihood has a good supplier base.

The point I want to make here is that Solvay, La Rochelle, has a finite open capacity; it will be tolling, not buying rare earths; it will work with whoever (and this could be more than one) can supply “acceptable” PLS and pay the tolling fees up to whatever portion of its open capacity it is allocating for tolling. It will be FIRST COME FIRST SERVED!

Look carefully then at the start-up of production dates for the juniors, before you decide that any association with Solvay is a game changer or it means that the game is over.

Next week I’ll comment on the latest comments by juniors on “marketing” their “products.” (Note from the Publisher: Next week’s commentary will be exclusive to InvestorIntelReport members only.)


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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  • Jake

    Considering Great Western’s recent announcement that they are in talks with an undisclosed toller , it seems that the current management agrees with you. They have also announced that the metallurgy had removed all radioactivity so perhaps Solvay is the company they are in talks with.
    Considering you may have been right all along, is it your opinion that great western does not need an SX plant ever (in a perfect world for discussion purposes) or just not now to get things going?
    Things have changed considerably yet it is not too far away from your predictions….. So, my question would be if it takes 10 years to get that kind of experience , will there always be a bottleneck to the juniors at the SX point?

    April 10, 2014 - 3:39 PM

    • Jack Lifton

      Any complex chemical engineering operation is subject to the rigorous operation of Murphy’s Law, “whatever can go wrong will go wrong.” So the best way for a junior that has first “solved” the radioactive nuclide problem to go is to begin with tolling and then to go to in-housel operations when feasible engineering-wise and economically. The problem with tolling is simply that until Solvay decided to offer it THERE WASN’T ANY AVAILABLE. The Chinese did not, and, as far as I know, do not offer tolling for foreign sourced ore or concentrates. The other problem is that the supply of tolling capacity is very limited.
      The non-Chinese world NEEDS ADDITIONAL TOLLING CAPACITY!!!
      And, yes there will always be a bottleneck, but it isn’t just experience that’s lacking at the beginning. it’s more than that. It’s also the right choice of products and the right choice of how far downstream to go. Even if you toll refine what then is th best thing to do with the toll refined products? This is really about intelligent client specific marketing, and I plan to address that next week.
      If you are street mining the rare earths I would forget it as a long term investment.


      April 10, 2014 - 3:54 PM

      • Motherearth

        Very interesting Jack, “client specific marketing” I take it next week you will be writing about LCM.

        April 10, 2014 - 4:00 PM

      • Jake

        I would say at least Great Western knows what to do with the refined products and furnaces at LCM waiting to use them and customers to buy what comes out of those furnaces.
        I am not sure what you meant by the sentence “if you are street mining….” ??
        I look forward to your next piece…

        April 10, 2014 - 4:03 PM

      • Daniel

        Lynas went straight to in-house production. Its designed specifically for Lynas ore composition so hopefully its still worth something or has a use after CCAA.

        April 10, 2014 - 4:16 PM

        • Tim Ainsworth

          Lynas announced it’s first supply contract with Rhodia May 2007:
          “The contracted sales account for a significant portion of the cerium and heavier Rare Earths, including europium and terbium, as well as other products such as lanthanum from the processing plant’s initial 10,500 tonnes REO capacity.”

          Subsequently Jan 2010:
          “Lynas Corporation Limited (“Lynas”) (ASX code LYC) is pleased to announce the Supply Contract signed with Rhodia (formerly Rhodia Electronics & Catalysis) for the supply of Mount Weld Rare Earths to be produced by the company’s subsidiary Lynas Malaysia Sdn. Bhd. in its Advanced Material Plant has been extended from a five year contract to a ten year contract.
          The contracted quantities account for a significant portion of the cerium and heavier Rare Earths, including europium and terbium, as well as other products such as lanthanum from the Lynas processing plant’s initial 11,000 tonnes REO capacity”

          Wonder where the SEG/HRE from the LAMP is going, right now.

          April 11, 2014 - 7:10 AM

          • Chris

            My bet is La Rochelle.

            Lynas and Solvay/Rhodia have been in supply and cooperation negotiations since 2006.

            At one stage Lynas was to supply Rare Earths required by Rhodia’s La Rochelle Plant directly from the proposed Shandong Rare Earths Processing Plant in China and also have access to Rhodia’s Liyang Separation Plant in China to process further other mixed Rare Earth chlorides from Mount Weld into separated Rare Earths oxides.

            April 11, 2014 - 8:23 PM

          • Tim Ainsworth

            Maybe/maybe not, no doubt Ce/La streaming straight to the CC business (perhaps freeing up capacity at La Rochelle), but the phosphors suite and balance may have a more convenient destination in these early stages.
            Point is, Lynas has a 7 year relationship with Rhodia/Solvay, pinched half their staff, foundation offtake underpins Ce to the 11ktpa runrate, and most importantly it is being executed realtime.

            April 11, 2014 - 9:46 PM

          • Chris

            A most pertinent point you make and might I add one that seems to be ignored by many.

            April 11, 2014 - 10:43 PM

  • Motherearth

    Sorry Jack what do you mean by PLS.

    April 10, 2014 - 3:48 PM

    • Springtrader

      Motherearth; Pregnant Leach Solution (PLS) is acidic metal-laden water generated from stockpile leaching and heap leaching. Pregnant Leach Solution is used in the SX/EW process.

      April 10, 2014 - 4:00 PM

    • Jack Lifton

      Process (or pregnant) leach solution. This is the result from extracting the desired metal values from an ore. In the first stages it may include species you don’t want, such as thorium in the case of the rare earths. I personally try to use the term, PLS, to describe the “clean” (only the desired values) concentrate solution, but I think I’m in the minority. So when you see the term check the context carefully.

      April 10, 2014 - 4:15 PM

      • Motherearth

        Thank you Jack , SKK can do that. Did Rhodia not separate Steenkampskraal in the 50s and 60s?

        April 10, 2014 - 4:32 PM

        • Joe

          Amen. First come first serve, though. How soon can they produce this clean PLS for tolling? And how punitive will it be to shareholders to finance the ability to produce said PLS?

          April 10, 2014 - 4:46 PM

  • Daniel

    Solvay has 50% capacity to produce more wine. Mouton Lafite is a good name to sell back to the Chinese at 10K per bottle. Its that rare earth fragrance that taste like old cigars.

    Didn’t France declare they don’t want anything more to do with China? No more feed stocks from off-the-books production in southeast Asia so if the crack down on illegal mining is successful than they should be at 100% capacity. Vietnam stock is smuggled stock.

    At least now there will be actual feedstock to produce another winepress but not at the quality of Solvay.

    April 10, 2014 - 4:08 PM

  • wwwater

    Jack – GWMG along with the expertise at Mintek have successfully produced a mixed rare earth carbonate (chloride form not suitable to long distance transport) which will be used to ship to a tolling facility. The plan at Steenkampskraal (SKK) is to remove the radioactive components at the mine site and produce the carbonate free of those contaminants. SKK has a permit in hand to store that material underground at specifications required by the South African Nuclear Agency. In my understanding SKK in the near future will be the only prospective rare earth project that will be able to meet the importation of radioactive free material to France as France previously banned material from SKK that was being processed in the late 1960’s by Rhodia for the thorium content in the monazite concentrate.

    April 10, 2014 - 4:38 PM

    • Joe

      Regarding GWG, how soon can it be done and at what cost to shareholders to produce significant PLS tonnage to send for further processing?

      April 10, 2014 - 4:50 PM

  • Chris

    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


    April 10, 2014 - 5:46 PM

    • Jack Lifton

      Solvay is very early on in the recycling of rare earth permanent magnets notwithstanding what the slide says and what the timetable shows. The issue is the collection and preparation of the scrap economically. I hope you have seen enough slide shows from juniors to know how much salt must be taken with them for digestion.

      April 10, 2014 - 9:29 PM

  • Daniel

    Mr Lifton
    Did you inform everyone that France has a 35 hr work week? Escargot can be a delicious byproduct of heavy rare earth.

    You know you are really onto something with the atmosphere of rare earth refiners in China. It seems like they are so tired of all the inefficiency in the capitalist market place they decided to pay us to produce rare earth outside of China and give us the separation technology as a gift.
    “CNMC is the same company that in 2009 offered US$286m in debt and equity to ASX-listed Lynas Corp (LYC) to complete construction of the Mt Weld REE project in WA.”

    April 10, 2014 - 8:01 PM

    • Jack Lifton

      Beware of Chinese companies bearing gifts. Sorry I couldn’t resist writing that. Note well that it is the environmental degradation and pollution that will NOT be imported into China and that the SX plant is PLANNED to be built in China.

      April 10, 2014 - 9:33 PM

      • Daniel

        I knew you had a sense of humour! Beware of Greeks bearing gifts, good advice.
        We need more global warming to make the North West Passage free from ice so that Greenland can toll in China.
        You mentioned a culling of those in the rare earth processing industry so whatever happens to those who cannot compete in China? Are they restricted from emigration? We could offer them a “Green Card” for their technology.

        April 11, 2014 - 1:56 AM

  • Dean

    Avalon Rare Metals!!!

    April 10, 2014 - 10:00 PM

  • vacuum

    @@ “How much water can you pour out of an 8 ounce glass? Does that seem to be a trick question to you? It really isn’t. The answer is 8 ounces.”

    Actually, the verb should be “could”, which is the conditional form of can–used in order to emphatically state the conditional circumstances appurtenant to the ability of pouring out anything whatsoever.

    For obviously, you cannot pour anything out of an 8oz glass if it were empty. And if it had had only 1oz of content, then neither 8oz would drain from it, but possibly 1oz. Possibly: because it depends upon the type of content in the glass. If it were an 8oz glass filled to the brim with Jack’s shaving cream rather than Jack’s favorite wine, you would not be able to pour out 8oz–not because shaving cream won’t eventually pour, but because of Jack’s beard.

    And let’s go back to that expression: filled to the brim. Liquids, assuming we are talking liquids, in glasses exhibit a meniscus, which can be concave or convex. If convex, this portends the possibility that the glass would have, or appear to have (and therefore be perceived as having) content in excess of 8oz. For sake of imagery, perhaps we could imagine a soufflé that Jack baked as an attempt to impress some French colleagues. Since they don’t bake soufflé in China, but rather egg foo yung, it might be difficult for some to imagine the concept of extra.

    Oh save all this nonsense!! It is clearly written that how much out of an 8oz glass. But there is still the problem of where you are doing the pouring. If you are underwater, you’ve stepped out of your spaceship onto the moon, or it’s August in Dubai.

    I realize Jack was naturally assuming a charitable reader who would tacitly afford a ceteris-paribus clause along with his creative introduction to his essay. I get that.

    All this gets to the point that the capacity of Solvay is not so slide rule. Inasmuch as capacity is in the beginning dependent upon engineering luck and trial, as he states, therefore capacity in the future is likewise dependent upon the mysterious human element. In life there is no set capacity, but rather a happening localized by a variety of material conditions but also the mentality, innovation of the engineers and operators. Since money is also the stepmother of innovation, a new revenue stream such as tolling might inspire new ways of increasing capacity. And voilà!

    Recollect that famous scene in the Tom Hanks Apollo 13 movie where Ed Harris’ character pours junk onto a table and says figure out how to fix the problem now. The hard minded engineers in the group shouted no way. The others picked up the hoses and began connecting their way to solution.

    I admire greatly hard minded thinking for a variety of reasons. For one, it might save a person from placing bets on penny stocks, for example. (a habit of mine). And the world appreciates an ability to drill down and separate wheat and chaff. …. The practical reason I do not favor the trait is that stocks, markets turn usually when things are dire, not when there is already information saying to buy. (inversely likewise regarding selling). Therefore, hard mindedness, rational extrapolation is sometimes not advantageous. [cf. Blessed John Henry Newman’s “illative sense” in his Grammar of Assent (1870), wikipedia.]

    The smartest people will miss owning these REEs companies when and if they go up. The not so smartest will buy a lot of losers and say, you know something, that Jack was right.

    April 11, 2014 - 6:26 AM

    • aurelius

      Vacuum: Nice literary exercise.

      April 12, 2014 - 3:20 AM

  • JJ

    The key question is what the “exempt or required” level of individual radioactive elements (expressed in Bq/grams or Bq/kg of REO) in the PLS is in order to be processed/tolled in La Rochelle. This is the main info required by potential junior, the info which will drive the flowsheet development. Once this is sorted out other deleterious elements come into play such as Al, Fe, Ca, Mn etc. Someone needs to post or announce this before we get excited about tolling.

    April 28, 2014 - 2:53 AM

  • Al

    Good insight into the other side of the equation Jack. Having REEs in a previously processed mineral is more important economically and practically than most Juniors want to confess. They show % HREO not CREO and negate minerology. Even if you manage to produce a RE Concentrate of a mixed RE carbonate it still needs to process economically. Remember Rare Earths are not Rare, just extremely difficult to process. Looking for a RE company that near producing a PLS from a 44% concentrate (97% mass pull) read up on Commerce Resources CCE.V.
    ROM 1.88% TREO – large homogenous resource. Low Th, Fl possible biproducts , simple flow sheet.

    September 24, 2014 - 1:29 AM

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