Lifton reviews Professor Dudley Kingsnorth’s “The Rare Earths Industry: Marking Time”
Professor Dudley Kingsnorth of Australia’s Curtin University in Perth is recognized as one of the world’s premier experts on the rare earths sector outside of China. He publishes a periodic review of the industry, which is first released to a subscription group of companies and individuals. The current review is entitled “The Rare Earths Industry: Marking Time.”
After receiving Professor Kingsnorth’s “The Rare Earths Industry: Marking Time” to be summarized by InvestorIntel, Tracy Weslosky the Publisher of InvestorIntel asked me to read the latest issue of Professor Kingsnorth’s review and to describe its salient points and conclusions for InvestorIntel’s readership.
Because I knew that Professor Kingsnorth was a featured speaker at the recent Critical Materials Conference organized by the Colorado School of Mines and the local (to the Colorado School of Mines) SME chapter I looked at the program carefully and noted the exceptionally interesting presentation by Alkane Resources. I am going to try and review both Professor Kingsnorth’s report and the Alkane presentation together, because the one (Kingsnorth’s) Illustrates how the problem of critical materials is being approached academically and the other (Alkane) illustrates a very good practical solution to what I call the geographic and geopolitical issues in the selection of critical metals (My views on these issues are stated in my most recent article for Investor Intel).
Professor Kingsnorth’s review is, in my opinion, not designed for the small investor with a short term outlook. It discusses briefly but succinctly the recent 21st century history of rare earth’s production and current end uses, i.e., current sources of supply and demand, and extrapolates these metrics to the near term of 2017-20. Professor Kingsnorth does describe the supply situation in the non-Chinese world as eminently able to satisfy any near term non-Chinese demand for the light rare earths but he only mentions two rare earth juniors, Northern Minerals and Avalon in a discussion of where in the ladder of ten steps, which he defines as the steps to commercial rare earths production, current juniors should be placed. I have to assume that he is telling us that these two juniors are his selections as the furthest along in development of the current crop of juniors. If so then I disagree with that conclusion. I know of at least three North American juniors that I think are further towards development than Avalon. I reserve judgment on Northern, a very excellent project, because I don’t know enough about it. I do however judge Alkane to be the closest to SARP of HREES and Nd and Pr of all of the REE juniors in the southern hemisphere, so I am in agreement with Professor Kingsnorth there.
The Kingsnorth study concentrates on the supply situation in China which has an extensive and well informed discussion of the ongoing and current consolidation of that industry and how that might affect the global rare earth industry.
A considerable portion of the report is taken up by a discussion of the Australian Critical Materials Initiative, which has been established at Curtin University in Perth for the purpose of developing total critical metals supply chains within Australia in order to create new industries and jobs in Australia.
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The report concentrates on the rare earths, which Professor Kingsnorth describes as prime examples of critical materials. I think that it is an important description of the state of the REE industry in China and in the southern Hemisphere, and it is certainly an eye-opener with regard to the critical materials atmosphere in Australia.
Note here in my article referenced above I defined critical materials in such a way that the rare earths do not today qualify as such in Australia. I certainly support Professor Kingsnorths’s work in trying to create an Australian total critical materials supply chain. His Institute is certainly a good way to bring the issue to the attention of the Australian populace and government.
What I took away from my reading of the Alkane presentation was that Alkane is a perfect example of what I would like to call the “right business model.” It is certainly today the best organized and furthest along of any polymetallic junior specializing in strategic and critical materials. I have little doubt of its financial success.
Alkane defines synergy in processing technology. Solvent extraction is mostly used and has been used for some time in the processing of zirconium (and hafnium) as well as of uranium (and vanadium), so that Alkane will be able to utilize its operational management team both in its zirconium processing and its rare earth processing projects, the fact that Shin-Etsu will separate Dubbo’s REEs does not obviate the need to get a compatible feed stock form of PLS to Shin-Etsu from Dubbo. In fact I would guess that part of the attraction of Alkane to Shin-Etsu is this management depth.
Alkane also has the rare feature of being able to mix and match output products as the market demands while still maintaining a low breakeven. This is an especially attractive feature when dealing with the price and demand volatility of the rare earths. Noted here is that I think that Professor Kingsnorth is too optimistic in his near term REE demand forecasts. I also note that the supply of magnetogenic REEs is not only to satisfy demand but also, much more importantly, to generate demand by tackling the security of supply issue outside fo China. This was certainly a prime driver for Shin-Etsu’s involvement.
I have more than a passing familiarity with the ferroalloy business, and am impressed by the choice of partner for niobium processing to end-use that Alkane has made. The same applies to its zirconium project.
My colleague, Dr. Gareth Hatch, who has visited Dubbo and also has seen the work being done for Alkane at ANSTO. He told me that both were very impressive projects. I hope to make the same visits later this year or early next year (Note that summer in Australia is winter in Detroit!).
Alkane is a world-class polymetallic critical and strategic materials play. I wish there were more like it.
Only the future will tell if Australia can host a total strategic/critical materials supply chain, but for the present I think Alkane is a sure global winner.
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>