EDITOR: | March 25th, 2013

The Rare Earth Space ‘A Culling of the Herd, and the Survivors’ (Part 3: Austral-Asia)

| March 25, 2013 | No Comments

Jack-Lifton-TMSOver the last three years I’ve spent significant time in China, Japan, Singapore, Malaysia and Australia. I am speaking twice this coming May in Malaysia on the future of the rare earth industry in Asia, and in China in August on the same topic but at an academic conference. In June I will attend two conferences in Australia, one focused on sustainable mining and refining of rare metals and the other on the rare earths industry in Australia.

I’ve come to the conclusion after reading the comments to Part 2 of this series, in particular, that many of the questioners are in the same position as the committee of blind men examining the elephant in the Hindu fable. They are convinced that their part of the story is the whole story. The most egregious fault, and the most common, is to assume that because a company says that they have a technology then it must be so. This is the Madison Avenue approach to investing. The biggest and/or the most expensive must be the best, and a contract to buy a technology means that I, the issuer of the contract, have both the operating technology itself and the skill to operate it and maintain it myself. I’ve known people who made millions in the stock market to then upgrade to a “restaurant grade” cookstove for 10-25 000 dollars and still be unable to cook anything better than they did on the electric one burner they had in their dorm room (illegally of course) at Chicago or Michigan (in my case).

I was pleasantly surprised by my reader, pva1, who asked in a comment to Part 2 of these series if I was going to remember Alkane, Lynas, and Northern Minerals when I made my “selections” for Austral-Asia. In fact pva1 and I are almost in perfect agreement. I am only going to add Hastings to his list at this time. Of course I have caveats and suggestions.

First, let me say that I have no first-hand knowledge of Vietnamese or Indian rare earth mining. Both countries have large resources of rare earths. But the development of these resources in both countries is controlled by their respective central governments, which are not forthcoming, nor are they required to be so. I’m also going to pass on any discussion of Stans Energy, which is technically in Asia, because I have never had a discussion with any of the technical managers at that company, and I don’t like to use press releases or web sites to make technical judgements. I also must note that Stans has not yet published a scoping study or a pre-feasibility study to review. I will say, however, that a rare earth refinery technical manager, whose opinion I respect very much, and who has not only visited the Kyrgyz sites but also speaks Russian and has worked in Russia, told me that he thought the mine was based on a very good deposit.

I have selected as survivors the mine sites and operations of Alkane Resources Ltd. (ALK.ASX), Lynas Corp. Ltd. (LYC.ASX), Northern Mineral Ltd. (ASX.NTU), and Hastings Rare Metals Ltd (ASX:HAS).

I think that of the non-Chinese integrated rare earth operations, Lynas [from mining through to separation of customer specified products] is the most competent I have encountered. The extensive technical operations and refinery operations staff at the Gebeng cracking and solvent extraction facility in Malaysia, led by 14-year Lynas veteran, Mike Vaisey, are highly experienced, skilled, and completely professional. My colleague and business partner in Technology Metals Research, Dr. Gareth Hatch, has recently visited the operations of Alkane and has a similar high opinion with regard to Alkane’s capabilities. Note here that the opinions I express here are mine and mine alone. I do not speak for Gareth, but I do value his opinions very highly.

Alkane is a truly polymetallic operation, and its technical and business management operations, led by Mr Ian Chalmers, are impressive.

Despite my caveat above about web sites, I urge you to study the web sites and other public-domain information of both Lynas and Alkane, because I think you will come away from that study with a better understanding of how a junior becomes a producer.

I have picked Northern and Hastings, but I want to give you a caveat (or two) that applies to them. They are both deposits that are dominated by the rare earth mineral, xenotime. This mineral is today probably the most desirable of rare earth minerals. It is yttrium phosphate and is commonly found with high concentrations of heavy rare earths such as dysprosium and terbium in its matrix. It is frequently found as a residue from the processing of the main tin mineral, cassiterite, or with uranium deposits. The recent interest in processing rare earth ores has caused the development of techniques to concentrate xenotime, to crack it efficiently and at lower concentrations than previously possible, and to separate the heavy rare earths (and yttrium) more economically than would have been possible even 5 years ago.

I therefore have come to the opinion that the ore bodies of Hastings and Northern will be worked by those who can concentrate the xenotime at the site, and then that these concentrates should be and will be shipped to a central location, most likely in Australia, to be cracked and separated. I note that xenotime concentrates can and usually do carry significant amounts of both uranium and thorium, but the Australian mining industry can handle both of these materials, and uranium can quite frankly be an asset. I think we are also at the beginning of an age in which thorium becomes an asset as the basis of a far cleaner technology to produce electricity by nuclear fission than uranium alone can provide.

Finally I want to say that I have no financial relationship whatsoever with any of the companies mentioned in this article, nor do I own stock directly or indirectly in any of them.

I note that in today’s news is a statement that Japanese researchers have found that a section of the  floor of the sea in Japanese territory has so high a concentration of rare earths that it would serve Japan’s needs for centuries and is, in any case, of a higher grade than any Chinese deposit. I doubt very much whether or not this silly article would even be considered a good joke on Bay or Howe streets, but I wish the Japanese press good luck in frightening their Chinese economic adversaries.

Jack Lifton


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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