EDITOR: | May 16th, 2014 | 11 Comments

Elk Creek one more step toward niobium independence

| May 16, 2014 | 11 Comments
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Six weeks, then six months: that’s the game plan for American’s only primary niobium project, according to recent report in the Omaha World-Herald, the newspaper taking a great interest in this project seeing it’s located in Nebraska. Six weeks to do the drilling — the decks have been cleared for that with drill permits still in place and to take place as soon as the equipment can be organised at the site — and then the rest of the year to work on the feasibility study. Then the steel industry — which needs niobium to make high-strength, low alloy steel (known in the industry as HSLA) — has one more source from which to buy this critical metal.

And then there are the familiar faces: the Elk Creek niobium deposit in southeast Nebraska, itself; the original owner which did the extensive exploration work that puts the project in the advanced stage (Molycorp and its predecessor) and — to square the circle, so to speak — the man who is running the project, former Molycorp CEO Mark Smith, now in the top job at NioCorp Developments (TSXV: NB | OTCQX: NIOBF).

NioCorpAt present, the United States imports 100% of its niobium needs, as does almost every steel maker in the world, as the metal is mined only in Brazil (85% of global output) and Canada. So the move by NioCorp to accelerate development of Elk Creek is a welcome step to independence in niobium for the U.S. and diversity of supply internationally especially since there has not been a new niobium mine opened since 1976.

After the feasibility study is completed, NioCorp will clearly have the option of finding an off-take partner as part of process of raising development funds. This would be following in the steps of another company advancing to niobium output, Australia’s Alkane Resources (ASX: ALK | OTCQX: ANLKY); the latter has an off-take agreement with Treibacher Industrie AG, an Austrian metal alloy producer which has been in the business since 1916. Alkane is somewhat different a proposition to NioCorp: the Australian company’s project is not a primary niobium one, that metal taking a (slightly) back seat to zirconium and rare earths. Alkane plans to be in production in 2016 at the rate of 3,000 tonnes a year of niobium — in a world market now estimate to be around 80,000 tonnes a year.

Elk Creek in production would be music to the ears of anyone in Washington; in the view taken by American strategic analysts, niobium is a critical metal on par with the likes of tungsten, yttrium and tin. The Japanese and South Koreans would be interested, too. A consortium from those countries has taken a stake in the world’s largest producer, Companhia Brasileira de Metalurgie e Mineracao (usually just referred to as CBMM). Some time ago, Australian Geoscience averaged out all the critical metals list (mainly the ones from Britain, the U.S., Japan and South Korea) and found niobium was No. 7 in terms of criticality.

Drilling began at Elk Creek in the 1970s, so there’s quite a pile of geological data. Molycorp decided in the early 1990s to set aside Elk Creek in terms of corporate priorities so it could focus soley on the Mountain Pass rare earth project.

Apart from CBMM, the other producers are Anglo American (also in Brazil) and a subsidiary of IAMGOLD which has a mine in Canada. Niobium is an alloying agent; when added to steel it makes the latter stronger, lighter in weight and highly resistant to corrosion. Niobium-laced steel also has a higher melting point as a consequence. The lightness thing is why 23% of niobium goes into steel for auto bodies. Pipes for transporting oil and gas are the next most important use for niobium in steel. Demand for the metal has been forecast to double by 2020 as steel makers in developing countries, notably China, move to lift the amount of niobium opera tonne of steel.


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Comments

  • Tracy Weslosky

    VB – Please resist any further commentary that does not provide factual information to qualify your opinions. There is no evidence of extravagant promises and claims, there is however; a track record of you having opinions that are unqualified, negative and unsubstantiated. For all of our readers that write me about VB to complain — no worries…VB usually behaves appropriately after his quarterly warning. And I appreciate that VB provides us with an opportunity to remind our commentators that we like professional and respectful debates that allow our readers to understand a topic better. For instance, I found it interesting to discover that Iamgold produces around 7% of the world supply of niobium…and the applications in nuclear energy is worthwhile of a Dr. Luc Duchesne story….

    May 16, 2014 - 9:17 AM

    • Dean

      VB should just go away. There’s always a black cloud over his head.

      May 16, 2014 - 10:05 AM

      • David Mortimer

        Has VB checked out Niocorps share price over the last few months it has more than tripled .
        Don’t miss the boat that’s all I’ll say Bob.

        May 16, 2014 - 12:27 PM

        • Veritas Bob

          I seem to recall some substantial Molycorp share price increases under Mark Smith’s tenure, more than septupling in less than one year from its first day closing price. The Molycorp share price is now more than 4 times lower than its first day low.

          May 16, 2014 - 2:41 PM

        • David Mortimer

          Different ball game here there are only 3 Niobium producers in the world Niobium is on the critical list for the US , the US can not depend on China /stroke Brazil or any one else for RARE EARTHS going into the future , we also know that Niobium is used to strengthen metal we also know that the world population is going to increase in the future that means a huge demand for niobium.

          May 17, 2014 - 10:30 AM

      • Gareth Hatch

        Which critical list is that, David?

        May 17, 2014 - 12:34 PM

        • David Mortimer

          S. 1113, the Critical Minerals Policy Act of 2011
          On May 26, 2011, Senator Lisa Murkowski introduced the Critical Minerals Policy Act of 2011,
          which was referred to the Committee on Energy and Natural Resources. On June 9, 2011, the
          Subcommittee on Energy held a hearing. The bill generally defines what critical minerals are but
          would request that the Secretary of the Interior establish a methodology (in consultation with
          others) that would identify which minerals qualify as critical. The Secretary of the Interior would
          direct a comprehensive resource assessment of critical mineral potential in the United States,
          including details on the critical mineral potential on federal lands. S. 1113 would establish a
          Critical Minerals Working Group to examine the permitting process for mineral development in
          the United States and facilitate a more efficient process, specifically, a draft performance metric
          for permitting mineral development and report on the timeline of each phase of the process. The
          DOI would produce an Annual Critical Minerals Outlook report that would provide forecasts of
          domestic supply, demand, and price for up to 10 years. DOE would lead research and
          development on critical minerals and workforce development that would support a fully
          integrated supply chain in the United States. Title II of the bill recommends mineral-specific
          action (led by DOE) for cobalt, helium, lead, lithium, low-btu gas, phosphate, potash rare earth
          elements, and thoriumn, Niobium . Title III would, among other things, authorize for appropriation $106
          million.

          May 19, 2014 - 11:14 AM

    • Veritas Bob

      https://www.youtube.com/watch?v=4W9EISVCT9c
      The parallels to his Molycorp pitches are uncanny.

      21:31 – incroyable.

      As for Dean, https://www.youtube.com/watch?v=MMzd40i8TfA .

      May 16, 2014 - 10:40 AM

      • Mortimer

        Mark Smith did bring molycorp to the top of the tree but he can’t predict future prices, he’s invested his own money in niocorp 2 million $so he has skin in the game, niobium is a critical metal, where as molycorp has light rate earths who’s basket price has hit skid row of late, you can’t blame Mr Smith for that.

        June 2, 2014 - 8:20 PM

  • hackenzac

    I say we keep him.

    May 16, 2014 - 3:57 PM

  • GoBucks

    Molycorp and Mr. Smith come in for quite a lot of flack. But the jury is still out. They’re still mining. Let’s hope they succeed.

    In any case, failure, should it end in one, is a business risk. We are free to succeed or fail in this country. For now.

    Edison failed quite a lot.

    George Washington failed quite a lot.

    And Trump has had his losses.

    So give Mr. Smith a break.

    Maybe VB (and all of us) could actually have a positive influence…write your senators and congressmen, tell them to pave the way for a more workable business climate? Reasonable, workable regulations?

    Just saying.

    May 19, 2014 - 10:17 AM

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