A Mixed Con is a Mixed Blessing in Rare Earths
I am pleased to note that Investorintel has now become a go-to site for discussions by industry recognized experts such as Dr Ian Flint in graphite mining and downstream processing, Prof Reed Izatt on the applications of Molecular Recognition Technology to the processing of technology metals from their ores; and Steve Mackowski on the actual operating experience of a mining/chemical engineer.
One can disagree with the conclusions on efficacy drawn by experts but even then reasonable people can disagree and still respect one another as I respect all of the above gentlemen.
Confucius is reputed to have said that wisdom begins with the proper naming of things, and so…
Five years ago, in 2010, when most of the then existing rare earth juniors were formulating their plans for developing a deposit into a mine while in accordance with the rules set out in Canada’s National Instrument 43-101, to enable them to publicly and legally raise money in Canada I observed that all of the plans terminated in the production and sale of a mixed concentrate, or as it was called (without any apparent realization of the irony of the nickname) a “mixed CON.”
Until recently the failed business models of the majority of the rare earth juniors were still focused on producing and selling “mixed cons.” Although none of them had any documentary or even anecdotal proof that such mixtures, or how much of such mixtures, were salable still the majority of PEAs showed the profitable sale of “mixed cons” to mysterious un-named entities. Those entities as we all knew were in fact Chinese rare earth separators none of whom had ever heard of or been approached by non-Chinese juniors for pricing information.
In fact the “discounts” taken by toll providers from the prices of the pure separated individual rare earth “oxides” in the PEAs were, in my opinion, and remain, pure speculation or even outright fabrication intended to make numbers work. If a particular rare earth junior company wishes to dispute this they merely have to show documentation of a firm offer by a credible service provider. Unfortunately the mandate of N.I. 43-101 that it be reviewed by a “qualified person” does not include a requirement for review by someone with economic common-sense.
Get our daily investorintel update
In fact for the separation of the light rare earths from a light rare earth mixed concentrate in 2012 the discounts were 60% and more, since the separator would have had to get rid of at least 80% of the volume of the mixed LREE concentrate to get to the balance, the praseodymium and neodymium, which was then as now the only desired material in that mixture.
It was and is different for “clean” mixed concentrates and the discount varies also with regard to which rare earths are present in the mixed concentrate. I am defining a “clean” concentrate as one that has radioactive species in low enough concentration so that both the shipping jurisdiction and the receiving jurisdiction do not prohibit its movement. In addition a clean concentrate has as little as possible of cerium or lanthanum; ideally less than 2% of the total volume. It goes without saying that such a clean concentrate should also be free of elements that inhibit, prohibit, or contaminate solvent extraction systems. These include but are not limited to salts of iron, aluminum, and manganese as well as fluoride anions.
As of this writing I do not know of any demand for mixed concentrates of the LREEs unless they are clean. This means that the mixed LREE concentrate announced earlier this year by Rare Element Resources, which is in my definition “clean” is valuable and can be sold at a reduced discount because of that fact. I do not know the current discount rate for clean LREE mixed concentrates offered by Chinese separators or by Chinese or Japanese separators operating in Viet Nam, but I am certain that it is competitive enough to make the construction of an in-house SX plant unattractive, or at least questionable, for the moment.
With regard to mixed concentrates of clean SEGs and HREEs that have been produced, for example, by Texas Rare Earth Resources I am very reliably informed that such materials can be sold into China or Viet Nam at a small discount to the prices that can be obtained for the individual separated SEGs and HREEs. Therefore at this moment it is problematic whether or not the cost of a separation plant is justified for SEG and HREE separation in-house. Of course if security of supply is capitalized or if the existing SX facilities of Lynas, Molycorp, Indian Rare Earths, or Solvay should become or are already tolling sites and are competitive then the question of whether or not to build an in-house SX plant becomes more complex .
Finally the decision whether to build in-house capability and capacity for rare earth separation and purification is also affected by the three new or newly applied rare earth separation processes in serious development:
- Accelerated SX;
- MRT; and
All three processes have been shown to be highly effective at bench scale and all three are now moving to pilot plant scale, so as to de-risk the construction of full scale plants.
Each of these technologies is being first applied to a specific ore concentrate or type of ore concentrate, but it seems intuitive that any and all of them could be applied to clean concentrates.
Two of the above systems, MRT and CIC/CIX , so I have read or been told, take the PLS formed by the extraction of the ore or ore concentrate directly. The third, accelerated SX requires separate and prior processing to remove radioactive and base metal/ion contaminants.
All three processes, it is reported (claimed), could be directly fed with clean mixed concentrates.
The open issues are CAPEX and OPEX, and there may be enough differences from the need to treat or not to have to treat initial feed stock (PLS) so that the CAPEX differential issue is moot. OPEX, I think, should be highest for an SX system among these three, but it has not yet been revealed what the costs for manufacturing the Superligands for MRT will be at scale. In addition accelerated SX seems to be much more compact and efficient than traditional SX, so that process management costs may be significantly reduced.
Traditional SX has a batch size threshold, so that the more of the feedstock that is of the desired metal values the better. This problem may be ameliorated by accelerated SX for which speed allows for smaller batch sizes. But in either SX case a clean mixed concentrate is necessary for optimal performance. MRT and CIC/CIX both seem to be able to either rapidly clean a PLS or operate in a highly selective fashion or both. With a clean PLS as a feedstock it will now have to be determined which if any nontraditional (non SX) separation technology is the most economical for that particular feedstock when compared with SX.
TRER’s Pr/Nd + SEG + HREE clean mixed concentrate would be I think the first valuable mostly HREE concentrate feedstock to be offered into the separation market by a domestic American producer if the company chooses to go to market at that point. Of course that decision will depend on whether or not marketing the mixed concentrate at that point will be more profitable than going forward with the complete separation of the concentrate into individual purified rare earths.
It is very significant that this decision point, whether or not to sell a mixed concentrate or to go forward to total separation, has been reached. The domestic American pack has thinned out to just the three survivors.
The economics of the domestic and of the global marketplaces for the rare earths will now in some combination determine which of the present juniors goes into production, but I think that American use of and acceptance of the need for innovative technologies has determined that American domestic rare earth producers will be in the winner’s circle.
It cannot be overemphasized here that the “discounts” for mixed concentrates offered by separators who buy such materials vary with the composition of the concentrate and the conditions (i.e., process) in the market places for the individual rare earths.
Press releases about qualitative achievements such as the production of a “mixed con” or the separation of an individual element no matter how pure need therefore to be placed in the context of total system economics. The questions to ask are what is the cost “all in “ of producing this “product;” what is its individual market size; and based on these numbers is it “competitive.” If not then as the philosopher said “cast it [the press release] into the flames.”
Jack Lifton is the CEO for Jack Lifton, LLC and is a consultant, author, and lecturer on the market fundamentals of technology metals. Technology metals ... <Read more about Jack Lifton>