EDITOR: | July 23rd, 2018 | 7 Comments

Offering a rare earths supply chain proposition for a looming trade disruption with China

| July 23, 2018 | 7 Comments
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Canada Rare Earth Corporation‘s (TSXV: LL) Chief Executive Officer, Tracy Moore, has a clear business proposition to global manufacturers who depend on supplies of rare earth minerals (REEs, rare earths) to make electronic goods: we can mitigate your risk.

There are 200 or so global manufacturers who depend on Chinese deliveries of rare earths. That’s because each of the world’s 30 or so REE refineries are located in China. And almost a decade ago, China sent REE prices skyrocketing when it threatened to disrupt supplies to other nations including Japan.

For that group of REE-dependent manufacturers, they currently have three options – either take the risk on relying on a constant flow of supply from China, build factories in the world’s most populous nation, or eliminate REEs through R&D. All of those options are quite hard to do. The opening of a refinery in Laos in southeast Asia would provide a fourth option to those manufacturers, allowing REE mining projects to sell material to a non-Chinese firm, Moore said.

“You have to be aware of the supply chain issues,” Moore told InvestorIntel. “We are in discussions for concentrates on a number of fronts.”

The prospect of a supply chain disruption has returned to the fore with the growing trade conflict between China and the United States. US President Donald Trump said last week that he might apply import levies on all Chinese goods, threatening the return of protectionism to world markets. The Trump government has drawn up a list of strategic materials where the United States is dependent on certain materials, and REEs are on that list. The US may promote the development of alternatives sources of those materials.

Rare earths are often only used in trace amounts but play key roles in modern technology. Of the rare earths, europium creates the red color in television screens. Most rare earths are mined, refined and manufactured in China into television sets and PC monitors, while others find their way into hybrid cars and wind turbines.

The building of a 250,000 square-foot refinery in Laos started 8 years ago and has been effectively ready for the past 5 years, but has been held up by the lack of an operating permit. The delay may have emanated from environmental setbacks that Australian producer Lynas Corp. has had with its refinery in Gebeng, Malaysia. Canada Rare Earth has an agreement in place with the plant’s owners to acquire a stake in the refinery as and when the permit is granted. Moore said the company understands that the permit is forthcoming.

Canada Rare Earth is already an active player in the global REE market. The company sells REE concentrates and has a longstanding relationship with Singapore-based commodities trading house Noble Group. The company has sold REEs to manufacturers in Canada, Europe and the United States.

With a capacity of 3,000 tons a year, the Laos refinery would process about 2% of the world’s supply and would be a game changer in terms of global supply and demand, Moore said. The company plans to add more refinery capacity in the future, as and when the initial step of operating the Laos plant is completed, he said. The company may also get involved in some mining activity, but would mainly act as a conduit for miners to get their ore processed.


Editor:

Matt Craze works with New York-based management consultancy 10EQS and is the founder of Spheric Research, a firm dedicated to global seafood industry research. Matt ... <Read more about Matt Craze>


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Comments

  • Offering a rare earths supply chain proposition for a looming trade disruption with China – TheChinaBiZZ

    […] There are 200 or so global manufacturers who depend on Chinese deliveries of rare earths. That’s because each of the world’s 30 or so REE refineries are located in China. And almost a decade ago, Chin… ( read original story …) […]

    July 23, 2018 - 10:06 AM

  • Donald

    Slight oversight on your behalf, Lynas Corporation is the alternative – largest producer outside of China.

    July 24, 2018 - 7:19 PM

    • Matt Craze

      Hi Donald, thanks for pointing that out. I should have been a bit more explicit. Lynas is indeed another option, but most of its refinery capacity is accounted for with in-house feedstock. CRE will make all of its capacity available to external mining companies.

      July 25, 2018 - 3:39 PM

      • Tim Ainsworth

        Correction Matt, ALL of LAMP inputs are sourced from Mt Weld and always will be for the foreseeable future. Pending resource update should make that obvious to Blind Freddy, if the current grade & suite does not already.

        Consequently it is totally focused on its downstream customers, probably not more than a handful in each of the key middle supply chain segments, and now with its expansion & optimisation phase looking to direct 100% production to ROW customers.

        Currently sponsoring a resurgence of the Japanese magnet industry and moving to 25ktpa REO, very easy to understand how they are relegated to a footnote here.

        PS, Tracy might be interested to learn Amanda ‘the bean counter” Lacaze was today announced Mining News CEO of the Year: https://www.miningnews.net/event-updates/news/1343497/winners-of-the-2018-mnn-awards-announced

        August 1, 2018 - 9:57 AM

  • joe o

    Tim, This is for you. Just wait until Ucore builds strategic metals complex in alaska using MRT starting production 2020/2021 and in SMC2 in kentucky shortly thereafter. Both using MRT Technology.

    August 1, 2018 - 2:39 PM

  • Tracy

    Thanks for the update Tim. I am delighted that Amanda won CEO of the year as she undoubtedly earned it for turning LYNAS around. Not sure why every column on rare earths brings up Ucore, but would like to see Ucore put out some good news as we would all be cheering for them as well. Presently I am a big cheerleader of Canada Rare Earth Corporation and speaking of award winning CEOs, love the way that Tracy is leading the helm here. This sector should be on everyone’s radar as it is always going to be that wild card…that should be in everyone’s portfolio.

    August 3, 2018 - 2:58 PM

  • joe o

    Tracy, sorry just a little dig at Tim. He thinks ucore/IBC/MRT is as he puts “magic pudding”.
    I also own Lynas so that s why ucore comes upin conversations with Tim. . Ucore has been spinning the same MRT tale for years. Supposably things are close to coming to fruition Re: Aidea, DOE, DOD, NDAA etc re: SMC plants in Alaska and Kentucky. Obviously strictly hearsay until proven otherwise.

    If Lynas can avoid additional complications with Malaysian Government they are set up well for next decade. As Tim says Lynas “Next” on the way

    August 3, 2018 - 3:12 PM

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