EDITOR: | May 2nd, 2017 | 17 Comments

Northern Minerals revs heavy Rare Earths engine

| May 02, 2017 | 17 Comments
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The board of directors of Northern Minerals Limited (ASX: NTU) has approved a $56 M budget for management to trigger its 3-year pilot plant for the extraction and purification of the heavy rare earth dysprosium from the Browns Range Pilot Plant project in Northern Australia, its flagship project, which is expected to be the first significant world producer of dysprosium outside of China.

Northern Minerals is focused on the delivery of the heavy rare earth (HRE) element, dysprosium. The Company has a large landholding in Western Australia and the Northern Territory that is highly prospective for this element.

The $56M project is funded through a mixture of equity, debt, offtake pre-payments, and deferred payments. I also suspect that R&D tax credits from the Government of Australia will play a role in the future.

Together with Canada, Australia has one of the world’s best regimes for funding of the Scientific Research and Experimental Development. The Research and development (R&D) tax incentive provides targeted R&D tax offsets designed to encourage companies to engage in R&D. The incentive has two core components. Entities engaged in R&D may be eligible for a 43.5% refundable tax offset for eligible entities with an aggregated turnover of less than $20 million per annum, provided they are not controlled by income tax exempt.

During the course of the pilot project Browns Range is expected to yield 148,200 kg of dysprosium in the form of 1,719,000 kg Total Rare Earth Oxide in a mixed Rare Earth Carbonate.

The pilot project has been designed to assess the economic viability, optimal flowsheet and end product specifications for a larger scale development of ten times the size of the pilot plant. This is a wise approach as technical issues can be overwhelming when the scale up is much greater than ten times.

Earlier in April the company announced an offtake agreement with Lianyugang Zeyu Materials Sales Co Ltd, a 51% owned subsidiary of the Guandong Rare Earths Group.

The Guandong Rare Earths Group is one of the 5 major heavy rare earth companies in China which are vertically integrated producers. Guandong Rare Earths Group aims to improve the international competiveness of China’s rare earth industry and voice to make a positive contribution.

The milestone agreement covers all planned production from the Browns Range Pilot Plant. The Sales Agreement terms are based on off Incoterms 2010 with pricing reference from a 2-month average of quoted prices on Asian Metals and Beijing Ruidow Information Technology.

The participation of Chinese interest in the project illustrates China’s continued long-term vision to maintain its hegemony on rare earths.

In the 1990s, China established control of the world’s rare earth market. In the pre-Kyoto era of the early 1990s, any notion of climate change was derided as a far-fetched tree-hugging notion that emphasized blindness. Ronald Reagan set the stage in the eighties for policy blindness when he purported that methane emissions from cows and trees were the main source of greenhouse gases. He painted a policy landscape that bluntly excluded rare earths: if cows and trees are the main cause of climate change, then there is no need to worry about rare earth elements to support wind power or electric cars.

Dysprosium is an essential ingredient in the production of DyNdFeB (dysprosium neodymium iron-boron) magnets used in clean energy and high technology solutions.

Most dysprosium is used in magnets (98%), where it is essential to enable the use of magnets at elevated temperatures. Specific uses of these magnets include hard disc drives, general-purpose electric motors, MRI scanners, and optical and acoustic applications. Other non-magnetic uses for dysprosium include lasers and the nuclear industry.


Dr. Luc Duchesne

Editor:

Dr. Luc C. Duchesne is a Speaker and Author with a PhD in Biochemistry. With three decades of scientific and business experience, he has published ... <Read more about Dr. Luc Duchesne>


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Comments

  • Tracy Weslosky

    Northern Minerals’ George Bauk is flying to Toronto for the Cleantech & Technology Metals Summit on May 15-16th and will be on a rare earths panel with Ian Chalmers of ALKANE, Amanda Lacaze of LYNAS, Greg Andrews of SEARCH Minerals and Andre Gauthier of MATAMC — email Diana@InvestorIntel.com if you need any details!

    May 2, 2017 - 10:13 AM

  • Jack Lifton

    The use of dysprosium per rare earth magnet has been greatly reduced in the last five years, but the number of magnets requiring the long cycle lives in high variability heat regimes that dysprosium additions bring has increased and is growing rapidly in China in particular. Thus even though the Chinese have actually been stockpiling dysprosium and its price today is only a fraction of the fantasy predictions of just a few years ago there is a definite critical aspect to dysprosium supply. Part of this comes from the declining “grades” of China’s ionic adsorption clays as well as from the costs of environmental remediation and of continuing operations under strict new environmental controls. Even as the Chinese Rare Earths industry consolidates and pares away the non profitable and environmentally incorrect mining operations there is still a ruthless competition among China’s now “Big Six” rare earth conglomerates for critical magnet materials such as neodymium/praseodymium and terbium/dysprosium. Thus we have the direct investment in the staged development of production at Northern Minerals, which tells you that a very experienced Chinese rare earth miner/refiner sees Northern as well enough developed to be underwritten for a staged long term development to add to the Chinese group’s security of supply. Chinese companies do not invest in rare earth mining or refining in North America due to junior mining immaturity, potential fraud and political risk in general. They have recently moved to secure supplies of critical materials in Africa, South America, and Australia. Northern Minerals is to be congratulated both for advancing its project to where it is attractive to the world’s most experienced rare earth miners and refiners and to then have secured the financing to bring its operations into production. Surely Northern Minerals will now become the non-Chinese world’s main producer of dysprosium, but that dysprosium will go to China where is will backstop a Chinese integrated producer against the predations of his Chinese competitors. Welcome to the real rare earth world.

    May 2, 2017 - 11:30 AM

    • Chris

      Mr Lifton
      The pilot plant project will largely be funded by R&D tax incentives courtesy of the Australian government. Being an R&D project and due to poor economics means the pilot plant will be operating at a loss with the Australian government taking care of the bill. Chinese get a new source of Dy at the expense of the Australian government. While the price of Nd/Pr is improving, Dy price is languishing. Looks like the HRE story is starting to unravel.
      The LRE story is looking good and the largest supplier of Nd/Pr to the free market is also looking very good.

      May 3, 2017 - 4:46 AM

    • Tim Ainsworth

      Lot of data sets around Jack but one JL Mag put up a couple of years ago, that has held up well re total domestic volumes EV production, extrapolated NdFeB demand together with the DyO input.

      2016 unit sales 529K rising to 1270k 2020, corresponding NdFeB growth 1057t to 2540t yet the Dy input only rising 85t to 135t.

      That would put total DyO into EV 2020 circa 340t, and considerably less with Tb substitution, resulting greatly diminished phosphor demand.

      That growth more more than offset by the projected heavy reduction in virtually every other segment to the point JL Mag estimated a cumulative 50% reduction in DyO demand from 2014 to 2020, with no indication they calculated the offset from either Terbium or Holmium substitution.

      Recent price action, incl DyO prices still below the August 2015 crash levels, strongly suggest the HRE suite has lost it’s primary price/volume driver for economic production.

      Raises the issue as to how hard rock production can ever compete with ionic clay sources, particularly when you consider quoted prices incl 17% Chinese VAT which most certainly will NOT be factored into imported values, oxides or concentrate.

      Which of course raises the other domestic tax issue of the 27% levied on HRE concentrate. I imagine the importer would be liable to pay this tax (or that competition won’t be very happy) and so deduct from agreed values.

      Last listed price I saw for 92% TREO Jiangxi concentrate with very similar suite values was $36kg and traded value was reported at $18kg, I’m wondering if NTU’s price expectations vary greatly from that benchmark?

      Regardless, net values inside China are a very long way from anything remotely viable for external hard rock production, particularly with Chinese mag maker forecasting a 50% reduction in total demand.

      May 5, 2017 - 11:03 AM

      • Jack Lifton

        Tim,

        As always your comments raise issues that must be taken into account. I don’t know, but i suspect that Northern has a customer who is concerned with “access” to supply. Who that customer is I don’t know but if the current Chinese investment in Northern is any indication then the capitalization of access is ( as I believe) real. Chinese internal competition is ruthless.

        Jack

        May 5, 2017 - 5:06 PM

        • Tim Ainsworth

          Frankly Jack I find it more than odd given the SRB has bought +1000t Dy into storage at $178kg past 12 months, and no doubt more to come as part of 11kt due to complete the 21kt total purchase target published last year.

          At the same time Asian Metals reported Dy production at <25% capacity earlier in the year, as DyO exports have returned to 2013/14 levels at just 900kg monthly average YTD.

          ALL the anecdotals, incl flat pricing <$180kg as other RE has appreciated, support the IMCOA data showing China has supply capacity 2x demand. Hard to understand why any would want 52% TREO concentrate.

          May 6, 2017 - 1:59 AM

          • Jack Lifton

            Tim,

            I don’t dispute your numbers on Dy. I do understand why the SRB is doing this-It is to keep Chinese HREE mines open, but I have no idea why a Chinese entity is at the same time pursuing additional supplies from outside of China. Perhaps China is really concerned that its domestic resources will run out. Perhaps this is just an example of the long term planning by China as part of its industrial policy that is simply unfathomable to western instant gratification “free” markets.

            Jack

            May 7, 2017 - 10:43 AM

  • Johnny

    Jack …why would northern minerals build a pilot plant that isnt using Mrt technology ,if its as efficient as you say it is ? I heard mrt is a tenth the cost of sx plants . In your last video for u core you say … dont build anymore sx plants ! Seems odd that they would spent all this money if MRT is superior !

    May 2, 2017 - 2:21 PM

  • Joe O

    Johnny,
    Jack isnt with UCORE anymore, now with texas rare resources or whatever it is called now. Connecting the dots I believe a) per c ecclestone Ucore may have been in contact w/ Northern Minerals b) Texas rare sources may be considering MRT for part of its procesing if it ever happens. 2 weeks ago jack called MRT a game changer and now he is gone from UCORE I would love to know if he still believes that or is CIC/CIX (texas rare earths processing method) the new flavor of the month. MRT next contract will be their first. I am a holder of ucore and hoping for the best.
    Would love for Jack to chime in as far as MRT still a game changer .

    May 2, 2017 - 3:10 PM

    • Johnny

      Joe o . Thanks for your response . I too am a significant holder of ucore shares . But this all seems so convoluted to me . Why would a company spend half a billion to build a full size processing plant when ucore|ibc could do it for 50 million or so ? Seems like a no brainer to me !

      May 2, 2017 - 6:48 PM

  • Joe O

    Could the MRT process be used after the mixed rare earth carbonate is produced? I have no clue about any type of science “During the course of the pilot project Browns Range is expected to yield 148,200 kg of dysprosium in the form of 1,719,000 kg Total Rare Earth Oxide in a mixed Rare Earth Carbonate.”

    May 2, 2017 - 3:43 PM

    • Jack Lifton

      Joe O,

      The MRT process would obviate the need to precipitate the mixed carbonates; the precursor solution could be selectively separated by MRT. This would be an additional cost savings, since normally the carbonate precipitation is a class separation (separating the REEs in total from other unwanted species that remain soluble when the REE carbonates precipitate). I do not make process choice decisions for Northern Minerals, and I suspect that the mixed carbonates are formed to minimize the volume of material to be shipped to a Chinese SX plant. I am not now marketing MRT for REE separations, so I wish Northern (a very good company) the best in its endeavor.

      Jack

      May 2, 2017 - 6:13 PM

      • Tim Ainsworth

        Jack, couldn’t reply above so I’ll tack it on here, suggest you research Chinese money flow to Australian RE, as in real estate.

        May 22, 2017 - 8:10 AM

        • Tim Ainsworth

          Ditto “above”, suggest the answer to “no idea why a Chinese entity is at the same time pursuing additional supplies from outside of China” lies here with the odd imbalance mining/smelting:

          http://www.info-re.com/index.php?/shop/article/3293

          Looks odd, any thoughts?

          May 22, 2017 - 8:48 AM

  • Henrik Unné

    It is a mistake to try to take advantage of the political humbug which is “anthropogenic climate change” in order to drum up support for dysprosium mining. We should not help the anti-man environmentalists.

    The assertion that human activity is causing a climate catastrophe is simply arbitrary. There is no valid evidence for this speculation. And it is a known fact of science that the normal state of affairs is that the earth´s climate is either getting warmer or colder. For the earth´s climate to remain stable over any significant span of time is the exception rather than the rule.

    So even if it were the case that the earth´s climate has been getting warmer for the last 100 years – what of it? So what? The earth has almost always been getting either warmer or colder for several billion years. Why should we assume that we humans are the cause? Let us not let the environmentalists and our power-hungry political leaders stampede us into committing suicide by means of razing our industrial civilization – which will require the continued use of fossil fuels until technology makes them uncompetitive (which has not happened yet).

    May 20, 2017 - 4:06 AM

  • Bill

    You can bet your life that if Twiggy had of been running Northern Minerals he would have made the Chinese pay a much higher price for what they have purchased and Twiggy would have prevented the Chinese from taking control, as it is the die has now been cast and when the Chinese are finished there will be nothing but crumbs left for Northern Minerals non-Chinese minority shareholders.

    May 22, 2017 - 7:35 AM

  • Alex

    As I understand from Northern Minerals presentation they got 50 millions from Chinese as advanced payment as a part of off-take agreement according that 100% of production Pilot plant will be sale to Chinese according prices publishing at Asian Metals . If they can not build Pilot Plant after 3 year and supply Chinese – 20% shares will be in Chinese ownership instead of supplying goods.
    On this 50 millions they will build Pilot Plant.

    May 23, 2017 - 1:16 AM

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