EDITOR: | November 5th, 2014 | 16 Comments

Game on as the rare earth processing revolution has officially begun

| November 05, 2014 | 16 Comments
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The rare earth processing revolution has begun in earnest as a set of North American and European hard rock Heavy Rare Earth Miners separate from the Pack.

Game-OnThe geology of heavy rare earth sourcing was stuck on China’s ionic adsorption clays and its “simple” extraction process, washing with a solution of simple ionic salts, was identified as both the process and the costs to meet or beat in order to be competitive.

But these deposits are one-trick ponys; after one cycle of washing, precipitating, and drying the Chinese pony express would ride on to the next hill and do it again. As long as there was a free flow of these increasingly critical materials out of China no one, frankly, gave a damn about competing with them.

Today, however, in the non-Chinese Rare Earth apace the processing revolution has arrived. The days during which Chinese ionic adsorption clays were the only known economical and practical source of the key and critical heavy rare earths have ended this week, and their demise as sole source is shining a spotlight on the North American and European hard rock sources of heavy rare earths as the obvious future global suppliers of these most critical materials.

When the USA’s Molycorp was used by a group of financial manipulators to kick start a “rare earth revolution” they backed the wrong horse and divined a future demand that was backwards. No one questioned the new emperor’s lack of a wardrobe, because geologists were set busy finding and re-finding rare earth bearing deposits to take advantage of the glorious revolution as a new way to separate resource investors from their money. Most of the juniors were “mining the street” for capital for shapeless or simply wrong business models of development. It was a time of big conferences, big cars, and big offices in Toronto, Vancouver, Perth and Sydney.

To cut to the chase: I have been following and advising on business operations just four rare earth junior companies for several years that have quietly now each separately on its own moved up and away from the herd to form an elite group of competitors each of which has:

  1. Maximized the extraction of the desired mineral values from their ore bodies,
  2. Separated completely the radioactive species from the PLS,
  3. Removed the low value light rare earths, cerium and lanthanum, from the PLS, and
  4. Produced a mixed rare earth concentrate, free of cerium, lanthanum, thorium, and uranium, that contains from 99 to 99.999% of trans-cerium (neodymium and beyond) critical, SEG, and heavy rare earths.
  5. In addition at least one has already announced that it has further separated the mix obtained in step 4 into separate light rare earth and a heavy rare earth concentrates. I believe that we will see one more of them achieve this desirable goal shortly and all four of them will have done it by the first quarter of next year although not necessarily with four different technologies.

NOT A SINGLE ONE OF THESE COMPANIES HAS BUILT A FULL SCALE SX PLANT!

All of them have taken “traditional” extraction and separation technologies, the use of which is exemplified and promoted by the vast multitude of former big mining managers who populate the rare earth junior space, and have either improved upon them, in the case of SX, by accelerating the process time and reducing dramatically the number of mixer-settler stages needed, or by using solid phase chromatographic technologies such as continuous ion exchange, and even by using some break-out technologies that I am not yet at liberty to disclose.

The current rare earth interest was triggered by Molycorp’s acquisition by a very deep pockets group of Wall Street, The City of London, and the Perth Exchange players. But I think that they backed the wrong horse. They chose a high grade light rare earth mine with essentially no heavy rare earths at all other than traces. They were focused on the IPO market in order to make a lot of money as quickly as possible, and it worked.

However from the very first day an analysis of the future rare earth markets led to the conclusion that the ideal rare earth deposit would be a heavy rare earth themed mineral mix with substantial light rare earth content, especially content of neodymium and praseodymium (the “magnet metals”). However even if they had realized this, and they may well have done so, they were focused on the idea that the ionic adsorption clays in China were unbeatable on a cost basis. They seemed to have completely ignored the fact that the immense entrenched Chinese light rare earth mines were even more unbeatable on a cost basis.

In any case some few western miners caught on to the fact that the maintenance of a global heavy rare earth supply based upon Chinese ionic adsorption clays was a fallacy. They then looked for and found and began the development of hard rock sources of the heavy rare earths, which do not seem to occur in China.

I well remember Bay Street hacks and lightweights braying about the fact that a mine solely for producing heavy rare earths could not possible be competitive with the Chinese “clays.” No one other than a shrewd Canadian group of high profile investors gave a thought to the weathered bastnaesite deposits in Wyoming that proved to be laced with (relatively) high grades of “heavy rare earths.” Even last year when the CEO of Rare Element Resources announced that Bear Lodge sat in the middle of a heavy rare earth “district” with deposits found to be increasingly rich in the heavy rare earths did anyone pay attention. As I said the first time I picked up a handful of weathered bastnaesite from a wheel barrow at Bear Lodge, Wyoming, “If you’ve got light rare earths in this condition and substantial heavy rare earths who needs Molycorp.”

I will now expand that to “If you’ve got Rare Element Resources, Ucore, and Texas Rare Earths, and each of them has a concentration regime and metallurgy (efficient extraction) worked out and each of them has a low cost separation/purification technology, and in Europe you’ve got Tasman Metals with the same processing credentials, who needs Molycorp?”

The Chinese say “may you live in interesting times” as a compliment. The hard rock heavy rare earth space is now entering interesting times.

There are some other good choices among the deadwood of the rare earth space, but they are in Africa and Australia, and I don’t yet know enough about them to put them among the Fab Four above (For you youngsters the Fab Four was the nickname of the Beatles that I and your grandparents enjoyed listening to).


Jack Lifton

Editor:

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>


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Comments

  • merlion

    Hi Jack, could you please speculate in which years RE production will begin for the ‘Fab Four’?

    November 5, 2014 - 4:32 PM

  • Jack Lifton

    Merlion,

    If you mean concentrate I would say late 2016. Separated individual rare earths will be produced at the same time.

    Jack

    November 5, 2014 - 5:24 PM

  • freethinking

    Jack, and what are we to make of the share prices of your fab 4, all appear to be under pressure and heading south – tells me the market is not convinced

    one of the picks outside your fab 4 is Northern Minerals which is trading around 2 year highs, and appears to now be no. 3 in the world in terms of market capitalisation, with only Molycorp and Lynas presently with larger market caps

    the market is speaking

    November 5, 2014 - 8:03 PM

  • merlion

    Jack, I keep files on these four RE developers. Maybe they’re not up to date but my research delivers the following.

    REE Bear Lodge Prospect. Their presentation dated Sept 2014 shows on slide 16 that Commissioning and Ramp Up will begin late Q4, 2016 and extend to 2017 and beyond.

    TASMAN presentation dated July 2014 shows on slide 30 that a production start-up is scheduled for H2, 2017.

    UCORE’s Bokan project PEA dated January 2013 discusses (section 24.1) a construction period of 2 years to begin summer 2014 implying ramp up to production some time thereafter. To my knowledge, construction was not initiated during the last 5 months.

    TRER’s amended Gustavsons PEA dated March/April 2014 discusses a 2018 production start. (section 22.2.1 page 145)

    Please point me to any updates if I’m behind the curve and thanks, as always, for your superb research.

    November 5, 2014 - 8:07 PM

  • hiwayman

    Jack,

    Shape up or ship out time is at hand. Your ‘overdue’ assessment will
    have the hedge funds and REE ‘intelligentsia’ in total rethink mode.
    And when a ‘down under’ HRE company releases their ‘thunder’ a
    charge into the ‘silk weaver,’ category will escalate.

    Fab Four may graduate to ‘High Five’ Jack, and those with their ‘ top paddock full of kangaroos’-(old Australian colloquialism)-will have a
    ‘light bulb’ moment and become ‘experts’– once again! 🙂

    Go well.

    November 5, 2014 - 8:45 PM

  • Alex

    What about demand for HREE ?
    From 2010 there is no new producing plant which produce additional HREE for the market. Just some companies make additional concentrates from luminicstsent scrap and return this quantatities into production with the help of chinese ( illegal export sourse) purification companies.
    Why you think market need additional producers of HREE, just because Chinese can stop export of it ?

    November 5, 2014 - 11:16 PM

  • Jack Lifton

    Alex,

    In America we call this the question of which came first the chicken or the egg. Without additional HREEs there can be no growth of the magnet, phosphor, or alloy demand yet without that demand there will be no pressure to increase supply. Accountants and CFOs do not like to plan production when raw material supplys are not secure. Someone has to make the first move. I do not doubt that there are large scale depsoits of xenotime in Australia, but I do not see the resolve to set up non Chinese separation, metal and alloy making, and magnet and armor alloy production in Australia. I see movement towards a non Chinese, non-Japanese regional toll separation plant, and I will keep you informed as and if it happens.

    November 5, 2014 - 11:30 PM

  • Simon_Strauss

    Hi Jack,
    are you sure that The Chinese say “may you live in interesting times” as a compliment ? I believe it was a curse.

    Australia as you know is blessed with several viable H-REE rich resources but due to a lack of local and overseas support most are likely to be processed in China or Japan.

    November 6, 2014 - 1:29 AM

  • Jack****

    “They chose a high grade light rare earth mine with essentially no heavy rare earths at all other than traces.”
    Could you please explain Jack how Molycorp was able to produce and sell all those tons of europium oxide into the phosphor market since the early days of the Beatles.

    November 6, 2014 - 10:12 AM

  • Alex

    The Mounteen Pass ore content around 1,4% of HREE , including Eu – 0,1%. During processing they have to get SEG (concentrate of Samarium-Gadolinium and Europium and some other HREE)
    Then you can purify SEG and get Eu2O3
    If they produce around 5000 tones it means that they can get 1000 tone didim for magnet and around 70 tones of SEG and Eu2O3 around 5 tones if they have instalated SEG processing.

    November 6, 2014 - 11:31 PM

  • Gareth Hatch

    Samarium, gadolinium and europium are not heavy REEs, despite what many of the junior miners would have you believe.

    November 7, 2014 - 1:01 AM

  • Jack Lifton

    Jack****

    Molycorp originally got into SX just to separate and purify Eu in the mid 1960s. When the phosphor scientists at RCA managed to reduce their Eu needs by nearly 90% Molycorp had a major set back and Eu for phosphor production was imported in ore concentrates from Africa and separated in west Chicago, Indiana. Rhodia had decided at the same time to separate all of the REEs in LaRochelle, France, and they built a far more sophisticated SX plant there than Molycorp ever did then or now. Molycorp has not ever been a major supplier of Eu. This is an urban legend.

    Jack

    November 7, 2014 - 1:57 AM

  • Bill Keenes

    merlion, I saw the part of your question regarding Ucore production time answered by Ben Kramer-Miller over on Seeking Alpha.

    In relation to Ucore Ben stated:-

    “Best case scenario the company gets their FS out in the next 6 months, they finalize financing by June and construction begins immediately afterwards with commercial production in mid-late 2017. ”

    the link:-
    http://seekingalpha.com/article/2563415-ucore-is-moving-forward-in-a-tough-environment-my-conversation-with-management?v=1415257482

    November 9, 2014 - 5:49 AM

  • Jack****

    Perhaps we can agree on one point Mr. Lifton, one of us is retelling an urban legend and the other is not. Your readers are wise enough to sort this out.

    November 11, 2014 - 11:04 AM

  • hackenzac

    Jack,
    Your quote on the next logical step in Ucore’s NR has me wondering: Do you expect Ucore to use this technology in lieu of SPE for separation and purification? These technologies seems rather similar. With 99% purity, it must be thorium free also. Is SPE out?

    “This is an exceptionally clean and high grade heavy REE mixed concentrate,” said Jack Lifton, a consultant to Ucore. “By clean, I mean free of radioactive elements and free of commonly produced elements that interfere with traditional Solvent Extraction separation such as Al, Fe, and Fluoride. MRT is a proven industrial technology that is now being applied to rare earth ore metallurgy. I look forward to the next logical step, the separation and purification of the individual rare earths from the mixed concentrate via MRT.”

    November 12, 2014 - 8:15 PM

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