The Rare Earth Space ‘A Culling of the Herd, and the Survivors’ (Part 2: Europe & Africa)
I was in France last week working on a rare earth processing issue. I met with a specific vendor, but this was a follow-up trip to a more extensive visit I made to France last November at which time I spoke before the French Strategic Metals Committee (COMES), a governmental group sponsored by BRGM, the French equivalent of the USGS. On that trip I also visited a French mining and metallurgical group’s research center, and in addition I had a very thorough tour of Solvay’s (nee Rhodia’s) Rare Earth Separation Plant in LaRochelle, France. This facility, LaRochelle, is the world’s longest running SX plant dedicated solely to rare earth separation and products. It has been operating non-stop for 43 years (As have I now that I think about it). It has a throughput capacity of 9000 tons per year and it has the capability of separating the entire suite of rare earths, from lanthanum to lutetium, from each other.
The man who oversaw the technological development of the chemical processes involved, Dr. Alain Leveque, was my guide on that visit, and I am very pleased to point out that he will be on a panel I am hosting at TMS2013 on “The State of the Art in Rare Earth Separation Processes.” No one outside of China, perhaps no one in the world is more qualified or experienced than Dr. Leveque in addressing this topic in particular when it comes to the application of solvent extraction to the problem.
Before I announce my choices of European and African junior survivors I have to make a disclaimer: I am a board member of two European companies, one of which, Tantalus Rare Earths AG, TAEN: GR, which has an ionic clay-type deposit on Madagascar, is listed on a German exchange, and the other one of which, AMR Mineral Metal Inc., is private, and its deposits and majority shareholders are located in Turkey. Because of conflict of interest and the rules of the exchanges in Germany, on the one hand, and the future plans of AMR, and the rules of the exchange upon which it will list, on the other, I cannot at this time publicly evaluate either company’s position lest I inadvertently disclose privileged information.
It’s easy to point out Europe’s survivor(s) in the junior rare earth’s space. There is really only the one public company, Tasman Metals Ltd., (TSX: TSM | NYSE AMEX: TAS), which has an impressive and large eudialyte deposit, of the total of contained rare earths in which 5% is dysprosium, in Sweden. The geologists who run as a herd on Bay Street and Howe Street will immediately snicker when they read my last sentence here. They will tell you, confidently, that eudialyte is a zirconium mineral that can’t be cracked to become a source of REEs, and even if somehow it can be efficiently cracked the REE grade at Tasman’s Nora Kaar is too low to be beneficiated enough to make it economical. Both of these statements were true in the 20th century where the geologist/promoters seem to live. I am also told that Tasman’s deposits can’t be developed, because they are in an upscale horse raising area, and, besides, the Swedish government has banned mining in the area. Neither statement is true, and the extreme opposite is much closer to the truth.
The attendees at TMS2013 will have an opportunity to ask about the current state of eudialyte treatment from the world’s leading rare earth mineralogist/geologist, Dr. Anthony (Tony) Mariano. I personally think that Tasman’s ore can be both beneficiated and extracted economically with resepct to its REE content, because I try my best to closely follow the 21st century developments in the field of extractive metallurgy.
I have one caveat for Tasman, but I have the same one for my African choice, so let me make that choice without further ado. Then I’ll discuss the caveat.
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I think that South Africa’s Frontier Rare Earth Ltd, (TSX: FRO), has the best ore body for long term production and the best business model for long term production that I have seen in the region. Frontier pioneered the publicly stated use of the Critical Rare Earth’s metric as a guide to its business model (Which guiding principle, I think, was also independently developed as a metric by one of my North American survival choices, Rare Element Resources* (TSX: RES | NYSE AMEX: REE). In this business model the production of lanthanum and cerium is held to as little participation in the revenue stream as possible. Note that all of my survival choices are using this metric, directly as in the business models of Frontier and Rare Element Resources, or indirectly as in the business models of Ucore* and Tasman.
Additionally all of my choices are fitting their initial production volumes to the market rather than using the, completely independent of the law of supply and demand, “bigger is better” model adopted from gold mining by so many rare earth juniors.
Here is my caveat for both of my European and African survivors: It is a matter of survival, or critical-I can’t stop using these terms- for a rare earth junior to either produce and toll separate a radio-nuclide free, hopefully also lanthanum and cerium free, “concentrate,” or to separate, in-house, the neodymium-praseodymium, SEG, and HREE mixtures in its concentrate, first into classes, and then into the individual critical rare earths in a company owned separation plant purpose built for their needs. I think it is a waste of money to build further lanthanum cerium separation capacity at this time. The uses for lanthanum may already have peaked with A DEMAND less than the current SUPPLY. This has certainly already happened for cerium. Both lanthanum and cerium, as well as uranium and thorium, can be all or mostly removed from the process leach solution right after the ore leaching chemistry is complete. The resultant process leach solution will then be reduced in volume by up to ¾. Such a solution is MUCH CHEAPER to process and much more valuable than the original concentrate.
I have come to the conclusion that the best deposits from an economical point of view are those which, upon removal of the lanthanum and cerium from the output equation, are profitable. Such deposits are necessarily relatively high in SEG and/or HREE and/or Y to begin with. Also I only like deposits that are large but with the minimization of lanthanum and cerium have the lowest breakeven possible, so that they can produce critical rare earths profitably for a long mine life.
I note that Frontier has a plan that includes the construction of a company owned and operated separation facility on Saldana Bay, Western Cape Province, Rep. of South Africa. If this plan is put into action then Frontier will have the capability, not necessarily the initial capacity though, to become a toll processor for the small but enriched in SEG, HREE, and Y deposits in southern Africa. Such a tolling operation would make Frontier itself a formidable competitor to China as an integrated source of higher atomic numbered rare earths. In that situation it would compare with Rhodia LaRochelle, France, which is today the only operating large capacity SEG and HREE separation plant outside of China.
I am a business development consultant to Tasman, but I have no paid relationship whatsoever with Frontier. All of my survivor picks have in common that they have first class administrators and deep technological backfields.
I love to learn, and I do make mistakes usually when and because I don’t know enough about a company. I do not and will not respond to mean-spirited comments that attempt to deflect rational argument by ad hominem and other diversionary logical fallacies. I think that share price arguments are mostly about the greater fool theory. Please ask Tony Mariano or Alain Leveque or Corby Anderson questions about mineralogy, extractive metallurgy, and separation chemical engineering. They are going to be at TMS2013, and they are world class experts. I’ll be listening to their answers very carefully.
Next week I’ll give my opinions on the non-Chinese projects in Austral-Asia. There are some tough choices there, and that’s why I saved the region for last.
Disclaimer: Jack Lifton is a consultant to Rare Element Resources Ltd., Tasman Metals Ltd. and Ucore Rare Metals Inc.
Jack Lifton is the Sr. Editor for InvestorIntel Corp. and is the CEO for Jack Lifton, LLC. He is also a consultant, author, and lecturer ... <Read more about Jack Lifton>