2014 needs to be a good year for the rare earth industry
It occurred to me that the answer might be: it all depends what happens in 2014. Yes, I know, that is a rather obvious statement to make; but I was not just being a smart-aleck. My point is that, I fear, too little will happen in 2014, and that lack of progress across the rare earth complex will further discourage investors in REE companies. Let me define that point further: of course, a great deal will happen over the coming year but much of that will be progress towards a goal rather than the goal itself being reached. That goal is construction or, better still, the successful beginning of production (the word successful, in terms of delivery on time and tonnages, being the operative word).
Will there be a new rare earth project brought into operation in 2014? Even those that seemed to be close a few years ago have struck road blocks. Stans Energy might now have been close to producing much needed heavy rare earths if it had not been for problems with the government of Kyrzgystan. Stans Energy is at least continuing with the preparation work with the processing plant which is not caught up with the mining licence issue. Months of arbitration still lie ahead.
The year 2016 seems like a bumper year for non-China HREE producers. By then, according to the British commodity consultancy Roskill, the heavies should be being produced by Alkane in Australia, Avalon, Matamec and Quest Rare Minerals in Canada, Tasman Metals in Sweden, Ucore Rare Metals in the U.S., Northern Minerals in Australia and Tanbreeze in Greenland.
As for Roskill’s timetable for the light rare earth producers, following Molycorp and Lynas getting into production, the next start up was Dong Pao in Vietnam. Toyoto Tsusho, Sojitz Corp and state company Lavreco were to be producing 3,000 tonnes a year by now, rising to 7,000 tonnes a year by 2014. In fact, as Sojitz has explained, the Japanese trading house put money into Lynas’ Mt Weld project because it did not see Dong Pao in production until 2014 and viewed the Australian mine as an earlier supplier.
According to a paper prepared by Japan’s Institute for Geo-Resources and Environment, Dong Pao has a resource of 7.4 million tonnes at 5.22% total rare earth oxides. However, 48.7% of the resource is lanthanum, another 33.7% being cerium. Next down is neodymium at 11.3% of the total. Heavy rare earth content is minor. Given the recent report by JP Morgan on Molycorp which predicted a substantial cerium surplus, it would be interesting to get an update on the thinking by the Japanese partners. No doubt the Vietnamese remain keen, the country having in mid-2012 inaugurated its first centre for rare earth research and technology transfer in Hanoi. Signed as part of a deal with Japan, the centre is seen by Vietnam of giving the country entry not just into mining rare earths but processing in the country and developing high-tech industries as a result.
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Also on the LREE scene, the other leaders were seen by Roskill as Great Western Minerals Group and its Steenkampskraal project along with Montero Mining in Tanzania. Then came Arafura Resources in Australia, Frontier Rare Earths in South Africa, GeoMega in Canada and MBAC in Brazil, followed by Peak Resources.
With all these companies, the rare earth story is intact. And, of course, there are many other REE companies toiling away, eager to pass milestones on their way to production. All and any successes will be applauded, but these might not be enough to turn the tide of market sentiment.
That will require solid news of start-ups.
But, as I suggested above, it may be that 2014 will be yet another year when we look longingly at the horizon waiting for our ship — any of the above ships — to hove into view. Meantime, we will continue to conjecture on the Chinese heavy rare earth situation, watch the Japanese go further down the “reduce, replace and recycle” road and allow China to have another year as the dominant player.
Which it will be beyond that, of course. The other point made by Roskill last March is that, even at its optimistic projections, China would account for 80% of world output by the end of 2013, 74% by 2015 and 61% by 2018. But even that has to be qualified: the impact of the rest of the world by 2018 will, they noted, be much greater in the LREE complex than the heavies.
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