EDITOR: | February 24th, 2016 | 9 Comments

Peak Resources: A rare earths magnet

| February 24, 2016 | 9 Comments
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Darren Townsend sees getting the metallurgy right as the number one priority given, as he puts it, “all the disasters with the rare earth companies over the years”. His Peak Resources Ltd. (ASX:PEK) has completed pilot plant tests for the beginning and the end parts of the process, and is now concentrating on filling in the “missing link” between them. The key bankable feasibility study due to be completed by December will pull all the loose ends together.

Ngualla_plant

The Australian company, of which Townsend is managing director, this week ticked off another box: increasing the size of the resource. At the Bastnaesite Zone within in the Ngualla project in Tanzania, there are now 19.9 million tonnes at 4.9% rare earth oxides, for 980,000 tonnes of contained REO. Peak expects that higher grades (up 8% since the last statement) will contribute to further reducing costs.

The estimated cost for developing Ngualla is now $367 million, including a 30% contingency buffer. As Townsend sees it, the main barrier to Peak getting into production is not any of the project fundamentals, but the illegal exporting from China that has been the main contributing factor to the 30% fall in neodymium/praseodymium prices in the past 12 months. They’re now trading at around $45/kg, a long way from the $70 that prevailed back in 2014 and at which non-China projects would be viable. Townsend notes that the “crazy” prices means that even 90% of China’s REE industry is operating at a loss. “You just can’t have 90% of an industry losing money,” he adds. When and where Beijing gets a handle on that problem no one (including probably those in Beijing) knows.

So far with the metallurgy, the initial stage has seen concentrate grades raised from 5% to 41%. This, as we have previously reported, involves technology to remove the majority of the cerium; this not only eliminates spending money on producing something that would lose the company money, but has enabled the downscaling of the processing plant – and, consequently, delivering capital (and operating) expenditure savings.

(Incidentally, Townsend makes it clear that he is not taking a poke at other REE companies that assumed cerium as part of their revenue stream: after all, when many of these projects were being planned, the cerium price was a good deal higher than it is now.)

Peak, after conducting pilot plant tests on beneficiation then jumped to the final solvent extraction phase, with a pilot plant operated at Ansto Minerals in Sydney. The company wanted to make sure that worked before completing all the other work. It did.

Peak’s big selling point is that it has what it describes as “the highest magnet metal (neodymium and praseodymium) grades of any rare earth development project in the world”. Townsend sees the main growth markets being permanent magnets for the wind turbine and automobile industries. According to a recent presentation by Chinese high-end magnet manufacturer JL-MAG Rare Earths, the growth in both sectors has been impressive. Wind turbine numbers have increased from 10,000 in 2005 to 70,000 in 2014. By 2020, the annual production of electric vehicles worldwide (including hybrid) will reach 16.3 million.

At present permanent magnet sales are growing at an average compound annual rate of between 6% and 7%. Demand from hybrid vehicles and wind turbine manufacturers is rising at 15% a year – one of the few areas, along with lithium demand, that is going against the global commodity downturn.


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Comments

  • Bill

    Full credit to Darren Townsend and the team at Peak Resources – it’s always been about the metallurgy, Peak was one of the few that worked it out early on and look at them now – one of the leaders in the race to production.

    Peak will produce a premium product with the removal of about 80% of the cerium, again it’s because they have got the metallurgy right.

    Excellent points made about illegal rare earth.

    So why is China allowing illegal rare earth production to continue – I could understand if the Chinese producers were operating at a profit … but the majority are not.

    Anyone like to speculate on Chinas motives regarding allowing illegal rare earth production?

    February 24, 2016 - 3:45 AM

  • Tim Ainsworth

    Because they need the NdPr to meet NdFeB demand.

    “illegal exporting from China that has been the main contributing factor to the 30% fall in neodymium/praseodymium prices in the past 12 months” is totally nonsensical based on Dudley Kingsnorth’s statement:

    “The Illegal mining estimate/forecast in China is based upon the need to make-up the rare earths shortfall in the Chinese domestic rare earths magnet industry not met by the Chinese Concentrate Production
    Quotas as indicated by Dr Chen (Deputy Secretary-General Association of Chinese Rare Earth Industries (ACREI)) at the Metal Pages Conferences in Chengdu in September 2014 and Shanghai in September 2015).”

    Anybody with even a rudimentary concept of RE would understand China doesn’t export NdO in any quantity, circa 50tpm, vs NdFeB circa 2000tpm, call it 600tpm NdO “value added”.

    February 24, 2016 - 6:54 AM

  • Bill

    “As Townsend sees it, the main barrier to Peak getting into production is not any of the project fundamentals, but the illegal exporting from China that has been the main contributing factor to the 30% fall in neodymium/praseodymium prices in the past 12 months.”

    Tim, if as you say …. China doesn’t export NdO in any quantity … why then a 30% fall in neodymium/praseodymium prices in the past 12 months

    February 24, 2016 - 7:15 AM

  • Tim Ainsworth

    Firstly look at the proportional fall in values over all elements, secondly the 2014 production rate that continued into 2015.
    Demand peak clearly evident across several market segments 2014, and China did not adjust production levels until H2 15.

    February 24, 2016 - 8:06 AM

  • Bill

    thanks Tim – so there are no records kept on illegal production and illegal exports, however you are able to better explain rare earth price falls by:-

    1. looking at the proportional fall in values over all elements

    and

    2. the 2014 production rate that continued into 2015

    How can this be of any assistance to anyone if it excludes the illegally produced rare earths that are illegally exported and not captured by these numbers.

    Here’s a novel idea for you to mull over; perhaps the world is being flooded with illegal rare earth exports from China (which includes NdO) which are being purchased by end users such. This then reduces demand for rare earths through official channels resulting in downward pressure on rare earth prices.

    February 24, 2016 - 4:00 PM

  • Tim Ainsworth

    Bill, why then are the Japanese, and now the Chinese even writing CONTRACTS, to import NdO from Lynas LAMP with all this theoretical cheap illegal material awash in the markets?

    China has roughly 85/90% of the NdFeB market and Japan most of the rest, so where exactly is this mountain of illegal NdPr going?

    February 25, 2016 - 2:24 AM

  • Bill

    Tim, unless a story is gushing about Lynas or what Lynas produces you are unaccepting.

    … and now you can’t even put a logical argument together – here you are telling us that demand for NdO is so great even the Chinese are lining up to buy from Lynas – how is this even a remotely logical explanation for the 30% fall in NdO prices

    February 25, 2016 - 2:56 PM

  • Steve Mackowski

    Please read my last article on InvestorIntel. The price of baseline REO products in China is being dropped to keep ROW supply out of the market place. The profit required by the Chinese mining company is now obtained in the value added chain above it. This is what you can do when the big 6 operate.

    February 25, 2016 - 6:40 PM

  • Investor

    Bill take a chill pill.
    I think Steve is right.
    Good project you have.
    A bit of a yoyo with a flowsheet but you have now ANSTO on it!
    Another 5 or so years, prices and demand will probably be there for your project to go ahead.
    Not sure if Tanzanians are more skill-full than Malaysians or Americans.
    These things will take time especially when you have SX etc.

    February 26, 2016 - 12:51 AM

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