Sky could be the limit for REE sector; Update on Africa projects
In August 2013 it is hard to credit that a major newspaper could publish articles about rare earths which begins thus: “Lanthanum, Cerium, Neodymium. Gadolinium, Terbium, Dysprosium. The names don’t exactly roll off the tongue. Still, if you haven’t heard of them, you should realise that you rely on them in countless moments throughout your daily life. These substances are all examples of materials occurring in technology on which we increasingly depend: rare earths. These 17 metallic elements are essential to iPhones, wind turbines, electric cars, robots working assembly lines, precision-guided missiles, and a host of other items.”
Give me strength, I hear you cry. This appeared during August in London’s Daily Telegraph. It was sort of thing that we wrote about rare earth elements a decade or more ago when the world started waking up to their potential. It is somewhat astonishing that presumably sophisticated newspaper readers are assumed by editors to still be largely unaware of REE.
But let us not blame the journalist. Last year I had lunch with a commodities analyst and started going on about the rare earths situation; he really did not know what I was talking about. Yet contrast that with the sophistication of comment on InvestorIntel.
There is a yawning chasm between the two worlds: general ignorance versus specialist knowledge, and in between not much as far as the general populace is concerned. Your average business person could hold up their end of a conversation about gold, oil, tin, natural gas; but mention rare earths and they would be lost. But even at our end, there are wide disagreements on what is happening, has happened and what will happen in the rare earths space. Are we in our own little critical metals ghetto, talking to ourselves and no one else?
These thoughts were triggered during a conversation I had on Friday with Ian Bamborough who runs TUC Resources (ASX:TUC) — and which, incidentally, just announced it was getting A$1.4 million from a Hong Kong investor which will help it progress its HREE projects in the Northern Territory. Anyhow, Ian made this remark: he was not just forging ahead with just another metals project. No, as he puts it, he is looking for the raw materials that will underpin what he called “the next industrial revolution”.
We are moving into what seems a continuous “next industrial revolution”. After all, it is only 20 years since I was using a very basic Mac Classic computer: really, it wasn’t much more than a word processor. I still had to then fax my copy to various newsletters for which I was writing (all of them printed on paper, and mailed from the U.S. to subscribers around the world). By contrast, the first industrial revolution quickly developed the need for various base and ferrous metals, but then pretty well plateaued for several decades; for example, the products of textile mills and and other industries were still transported for a long time by sailing ships. Now everything is changing, all the time.
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Bamborough’s argument — and it one that has been made by Dudley Kingsnorth and others — is that the demand for rare earths will be there if the supply is there (scandium being a classic case: a market of 10 tonnes a year could be the hundreds of tonnes if only the potential buyers — and developers of new technologies — could depend on regular supplies of scandium oxide). And that’s the problem.
So what is the take-home message? I guess it is that the rare earth industry just has to plough on and believe that give them the products, and the customers will come (and spring into existence).
What is most important is that the debate has to widen. Going back to that quote above, we seem to have got ourselves in a rut. Too often even we are talking about what is happening now.
This industrial revolution moves on every day. We have to start thinking more about where we are headed because, taking the past 10 years into account, there will be uses in 2023 for rare earths of which we now could barely imagine. The sky is the limit.
RARE EARTHS/CRITICAL METALS: Following on my preview last Monday about the Africa Down Under conference in Perth, Australia, here are a couple of points made by companies of interest to readers of InvestorIntel.
Peak Resources (ASX:PEK) told the conference it was planning rare earth production by 2016. Technical Director, Dave Hammond, said the company’s 100%-owned Ngualla Rare Earth Project distinguished itself from other rare earth projects in the world due to its lower capital and operating costs, and low risk due to a proven three stage metallurgical route it had developed. Mr Hammond said Peak was committed to developing the project – which has mineral resources of 195 million tonnes, and is one of the largest and highest grade rare earth deposits in the world – to become a low cost, long term rare earth producer. “A pre-feasibility study is currently in progress which is due for completion early next year, after which we will go to the definitive feasibility stage during 2014. Under current time-frames, we will then undertake engineering and design work with the aim of commencing construction in late 2015, followed by maiden production in late 2016,” he added.
The first results of a $1.6 million scoping study into an Australian company’s plans to develop one of only a handful of mines for the critical metal, niobium, are expected in the first quarter of 2014. Perth-based Cradle Resources (ASX:CXX) said the study, commenced only last month, would be focused around a two million tonnes per annum operation in Tanzania. Cradle’s Managing Director, Mr Grant Davey, said today solid demand for niobium was expected over the next decade.
“This growth will be due to general growth in steel volumes and increased use of niobium concentrates in steels,” Mr Davey said. “The market opportunities are significant. There are only three main producers – CBMM, IAMGOLD and Anglo American – and CBMM controls about 85% of the market and therefore the metal’s price. Significantly, there have been no new niobium producers since 1976 – although the market has grown substantially“.
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