In-house production key to making Energy Fuels the world’s lowest cost producer of rare earth metals

Energy Fuels takes giant step towards complete, in-house, vertical integration in the production of rare earth permanent magnet alloys

Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) has just this week announced that it will buy, subject to due diligence, a huge Brazilian deposit of heavy mineral sands, which it will mine to produce a concentrated mineral mix that will contain zircon, ilmenite (titanium), and monazite. This concentrate is expected to be sold to partner companies, which will extract the zircon and ilmenite as payables, and the residual monazite, a waste product in zircon/ilmenite processing, will be conveyed at a nominal cost (as part of the arrangement to supply the heavy mineral sands to partners) to Energy Fuels’ White Mesa, Utah, where the monazite will be cracked and leached to extract a clean rare earth content as a mixed carbonate and to extract and sell or legally dispose of its uranium and thorium content.

Energy Fuels is already buying, and processing monazite produced in the above way from the zircon/ilmenite operations of Chemours in Georgia, but the Brazilian purchase will allow Energy Fuels to diversify and lower its cost of monazite concentrates.

The in-house production of monazite rich heavy mineral sands by Energy Fuels will be the foundation of its program for the vertically integrated (in-house) production of rare earth metals and alloys from (in-house) separated and purified individual and blended rare earth salts.  

Energy Fuels operates the only operating uranium processing “mill” in the United States and the only facility in the United States in the U.S. capable of processing monazite for the recovery of uranium for sale to nuclear power plants, and the recovery or legal disposal of the thorium and other radionuclides associated with monazite. 

The company has already begun processing purchased monazite into a mixed rare earth carbonate, and currently has the capacity to produce thousands of tons of such mixed rare earth carbonates per year. Energy Fuels’ mixed carbonate is the most advanced rare earth product being produced at a commercial scale in the U.S. today. The company is also making major strides in producing separated and refined individual and blended rare earth products at its mill.

Comparatively, monazite contains up to 50% more of the recoverable core magnet metals, neodymium and praseodymium than the bastnaesite mined at Mountain Pass, California.

Energy Fuels is finalizing a scoping study for a dedicated, rare earths, solvent extraction separation system and is finalizing the commercialization of a new rare earth metals and alloys production process demonstration.

Within 24-36 months Energy Fuels has the potential to be the world’s lowest-cost producer of separated individual rare earths and will therefore the lowest cost producer of rare earth metals and alloys. No government subsidies have been needed. Just managerial knowledge, experience, and skill. 

Energy Fuels already is a major domestic supplier of uranium and vanadium In fact, the company announced at its AGM, earlier this week, that it has signed a decade long supply deal with two American utilities to provide them with more than 4,000,000 lbs of uranium. This contract will bring in more than USD$200,000,000 over its life. 

Energy Fuels is a producing and growing domestic American critical metals processing hub.

Disclosure: Jack Lifton is a member of  the Advisory Board for Energy Fuels Inc., and may hold securities or options in some of the companies mentioned in the above article.

America’s Energy Fuels offers investors a way to make the “green” revolution happen in the USA

This decade is all about converting our society from fossil fuels to green energy and establishing locally sufficient and secure supply chains. If we agree that nuclear is the best form of base-load electricity to get us off of fossil fuels, then that makes uranium the key green energy source. Solar and wind will also play an important role in future years but are at best intermittent sources of electricity so that they require that lithium-ion and vanadium batteries be used for energy storage. Our motor vehicles will increasingly be powered by electric motors of the permanent magnet type, the best of and most efficient of which are those made from the magnet rare earths (Nd, Pr, Dy, Tb) and “fueled” from  rechargeable storage batteries onboard the vehicles,

To make the “green” revolution happen in the USA a local supply chain must be developed to supply the key and critical materials to manufacture the electricity required and the batteries required to store that electricity until it is needed. This is why late last month the White House released a fact sheet: “Securing a made in America supply chain for critical minerals.

We can see by the price action below (for the full year 2021) how demand for key metals is pushing up prices:

  • Uranium oxide – Up 38%.
  • Neodymium-Praseodymium oxide (NdPr) – Up 112%.
  • Vanadium oxide – Up 62%.


Note: Prices for each of these commodities have continued to show significant strength in 2022, especially uranium.

Today’s Company is the USA leader in uranium production processing, which also has vanadium production processing, and is a growing rare earths processor, which today is America’s only producer of the mixed rare earth carbonates required by the rare earth industry as a feedstock for the manufacturing of individual and blended rare earth chemicals used in the production of rare earth permanent magnets.

Energy Fuels Inc.

Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) has been very busy for the past two years. While others were talking, Energy Fuels was taking action. The Company has been building up uranium & vanadium inventory and producing and selling mixed rare earths’ products,

Financial results of a net income of US$1.5 million for 2021 are very deceptive, as Energy Fuels chose not to sell uranium and was still in the process of developing its rare earths processing capabilities and securing additional feed sources. In fact, Energy Fuels is sitting very nicely as they state in their March 2022 update:

“At December 31, 2021, the Company had a robust balance sheet with $143.2 million of working capital, including $113.0 million of cash and marketable securities, $30.8 million of inventory, and no short term (or long term) debt. At current commodity prices, the Company’s December 31, 2021 product inventory would have a value of approximately $60.6 million…….While the Company chose to not sell any uranium during 2021, it is now actively engaged in pursuing selective long-term uranium sales contracts.”

Uranium prices have almost doubled the past year

The current uranium price is US$57.25/lb, almost double that from a year ago when it sat at about US$30/lb. This means it makes sense for Energy Fuels to “actively engaged in pursuing selective long-term uranium sales contracts”. This may allow Energy Fuels to dramatically ramp up revenues in 2022.

Furthermore, if we get a uranium supply chain disruption from Russia controlled Kazakhstan (41% of supply) or Russia (6% of supply) we may see uranium prices move well above US$100/lb.

Energy Fuels would be in pole position to start selling their uranium inventory and ramping up U.S based uranium production.

Energy Fuels is the leader in U.S. uranium production used for nuclear fuel that can be used for fossil free U.S. electricity

Source: Energy Fuels website

China dominates rare earths supply

Around 85% of the global supply of rare earths comes from China. Should the USA and China have any type of “trade war” or disagreement over the current Russia-Ukraine war, China could choose to stop exporting rare earths products to the USA. Just as with uranium, this would have crippling consequences for the USA.

There are very few secure and available sources of rare earths outside of China. U.S. based Energy Fuels would suddenly become a key and critical supplier.

Energy Fuels is rapidly moving to grow their range of rare earths products. In their March update the Company stated:

  • “The Company produced approximately 270 metric tonnes of mixed rare earth element (REE) carbonate (RE Carbonate), containing 120 metric tons of total rare earth oxides (TREO) during 2021, as it commenced ramping up its REE recovery infrastructure. Energy Fuels’ RE Carbonate is the most advanced REE material being produced in the U.S. today.
  • The Company is currently in active discussions with several sources of natural monazite sands around the world to significantly increase the supply of feed for its growing REE initiative.
  • During Q1-2022, the Company began commercially separating Lanthanum (La) and Cerium (Ce) on a small scale from its RE Carbonate, using an existing solvent extraction circuit at the Mill. This represents the first commercial level REE separation to occur in the U.S. in many years.
  • The Company is planning to install a full separation circuit at its White Mesa Mill (the Mill) to produce both “light” and “heavy” separated REE oxides in the coming years, subject to successful licensing, financing, and commissioning, and continued strong market conditions.”

Energy Fuels is producing rare earths used in many electric vehicles and wind turbine electric motors

Source: Energy Fuels website

Energy Fuel CEO & President, Mark Chalmers, summed up Energy Fuels nicely, stating:

“In 2021, we believe Energy Fuels further strengthened its position as America’s leading multi-commodity, critical mineral company, as we made excellent progress on our uranium, REEs, vanadium and medical isotope initiatives. We are deploying our ‘one-of-a-kind’ licenses, facilities, and expertise to responsibly recover the critical elements needed for carbon-free nuclear energy, electric vehicle powertrains, wind generation, advanced electronics, grid-scale batteries, other clean energy and advanced technologies, and potentially cancer therapeutics.”

Note: Bold emphasis by the author.

Closing remarks

Energy Fuels offers investors a critical materials (uranium, vanadium, rare earths) growth play, as well as an investment that can outperform if either Russia (uranium) or China (rare earths) decide to punish the USA.

What a great combination! Growth as the green revolution takes off and protection from Russia and/or China in the unfortunate case that the geopolitical environment gets worse.

Energy Fuels trades on a market cap of C$1.911 billion (US$1.516 billion).

Mark Chalmers says that Energy Fuels will be soon ready to resume processing of yellowcake, the ore concentrate of uranium

In a recent InvestorIntel interview, Tracy Weslosky spoke with Mark Chalmers, President and CEO of Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) about how Energy Fuels is positioned for filling the uranium supply gap arising from the interruption of the supply from Russia and Kazakhstan.

In this InvestorIntel interview, which may also be viewed on YouTube (click here to subscribe to the InvestorIntel Channel), Mark Chalmers highlighted the uncertainties that the US nuclear electric utilities are facing because of their dependency on uranium supply from Russia and Kazakhstan. He also stressed the urgency for the transition to alternate uranium sources. Highlighting the current surge in uranium prices, Mark went on to provide an update on the uranium production capability at Energy Fuels’ White Mesa Mill, which he said is “closer to market than anything else in the United States.” He pointed out that within a few months of an order Energy Fuels White Mesa mill could be producing yellowcake, the uranium concentrate that is refined into nuclear reactor fuel. No other American uranium ore processor can be operational in that time frame.

To watch the full interview, click here.

About Energy Fuels Inc.

Energy Fuels is a leading U.S.-based uranium mining company, supplying U3Oto major nuclear utilities. Energy Fuels also produces vanadium from certain of its projects, as market conditions warrant, and is ramping up to commercial-scale production of REE carbonate. Its corporate offices are in Lakewood, Colorado, near Denver, and all of its assets and employees are in the United States. Energy Fuels holds three of America’s key uranium production centers: the White Mesa Mill in Utah, the Nichols Ranch in-situ recovery (“ISR“) Project in Wyoming, and the Alta Mesa ISR Project in Texas. The White Mesa Mill is the only conventional uranium mill operating in the U.S. today, has a licensed capacity of over 8 million pounds of U3Oper year, and has the ability to produce vanadium when market conditions warrant, as well as REE carbonate from various uranium-bearing ores. The Nichols Ranch ISR Project is on standby and has a licensed capacity of 2 million pounds of U3O8 per year. The Alta Mesa ISR Project is also on standby and has a licensed capacity of 1.5 million pounds of U3Oper year. In addition to the above production facilities, Energy Fuels also has one of the largest NI 43-101 compliant uranium resource portfolios in the U.S. and several uranium and uranium/vanadium mining projects on standby and in various stages of permitting and development. The primary trading market for Energy Fuels’ common shares is the NYSE American under the trading symbol “UUUU,” and the Company’s common shares are also listed on the Toronto Stock Exchange under the trading symbol “EFR.”

To learn more about Energy Fuels Inc., click here.

Disclaimer: Energy Fuels Inc. is an advertorial member of InvestorIntel Corp.

This interview, which was produced by InvestorIntel Corp., (IIC), does not contain, nor does it purport to contain, a summary of all the material information concerning the “Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete.

This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking statements are based on the opinions and assumptions of the management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Prospective investors are urged to review the Company’s profile on Sedar.com and to carry out independent investigations in order to determine their interest in investing in the Company.

If you have any questions surrounding the content of this interview, please contact us at +1 416 792 8228 and/or email us direct at info@investorintel.com.

Byron King, Mark Chalmers and Jack Lifton on Energy Fuels becoming ‘a domestic Gigafactory for critical minerals’ in the USA

In this episode of Critical Minerals Corner, Byron King and InvestorIntel Editor-in-Chief and Member of Advisory Board at Energy Fuels Inc. (NYSE: UUUU | TSX: EFR) Jack Lifton are joined by Mark Chalmers, President and CEO of Energy Fuels Inc. to discuss how Energy Fuels “could be a domestic gigafactory for critical minerals in the United States of America.”

Mark Chalmers started by saying that Energy Fuels is the only company in North America that provides exposure to the critical materials uranium, vanadium, and the rare earths. Providing an update on Energy Fuels’ agreements with Neo Performance Materials Inc.’s (TSX: NEO) and Nanoscale Powders, Mark went on to explain why Energy Fuels is “more advanced than any other company in North America” and provides an alternative to China for producing rare earths from monazites in the U.S., while operating at world-class standards. Jack Lifton added, “Energy Fuels is the only commercial producer of downstream rare earth products today in North America.”

To access the complete episode of this Critical Minerals Corner discussion, click here.

Some potential winners from the White House commitment to ‘Securing a Made in America Supply Chain for Critical Minerals’ Announcement

Could this be the moment the USA finally takes some actions towards supporting critical minerals supply chains? The big news in the world of securing domestic supplies of critical minerals for the USA last week were two key announcements by the White House:

Additionally, the first article linked above refers to earlier reports (E.g: America’s Supply Chains) and states: “the reports recommended expanding domestic mining, production, processing, and recycling of critical minerals and materials – all with a laser focus on boosting strong labor, environmental and environmental justice, community engagement, and Tribal consultation standards.”

The takeaway here is that investors looking to benefit from the new White House initiatives need to look for U.S. domestic critical mineral projects, processing projects, and recycling projects. A U.S.  processing project would include Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) rare earths processing at their White Mesa mill in Utah, USA. Today I will focus on the U.S. critical minerals projects.

China has dominated the critical minerals supply chain, leaving the U.S. vulnerable this decade

After many years of talk and very limited action, it appears the USA may finally be waking up to the need to urgently support and facilitate domestic U.S. critical minerals supply chains. Those of us involved in the manufacturing industry know that for years China has been buying up and controlling the critical minerals’ supply chains. The consequences are that China now completely dominates the supply chains for lithium-ion batteries, electric vehicles, wind energy, and solar energy. These are multi-trillion-dollar industries, but if you cannot access the raw materials then you cannot produce a product. We saw that in 2021, with semiconductor shortages slowing the U.S. auto industry, and we are seeing it again now with lithium-ion battery shortages leading to a limited supply of domestically produced EVs, despite enormous consumer demand. Tesla has an estimated 1.3 million pre-orders for its Cybertruck but has delayed production until 2023 due to not having enough lithium-ion batteries.

Green energy from solar, wind, and nuclear will increasingly power electric vehicles

Companies that may benefit from U.S. support of the critical minerals industry

Looking through the White House announcement gives us several clues:

  1. “These minerals—such as rare earth elements, lithium, and cobalt……As the world transitions to a clean energy economy, global demand for these critical minerals is set to skyrocket by 400-600 percent over the next several decades, and, for minerals such as lithium and graphite used in electric vehicle (EV) batteries, demand will increase by even more—as much as 4,000 percent……will also discuss $3 billion in BIL funding to invest in refining battery materials such as lithium, cobalt, nickel, and graphite
  2. “President Biden will announce that the Department of Defense’s Industrial Base Analysis and Sustainment program has awarded MP Materials Corp. (NYSE: MP) $35 million to separate and process heavy rare earth elements at its facility in Mountain Pass, California.”
  3. “Berkshire Hathaway Energy Renewables (BHE Renewables) will announce that this spring, they will break ground on a new demonstration facility in Imperial County, California, to test the commercial viability of their sustainable lithium extraction process from geothermal brine……In addition to BHE Renewables, Controlled Thermal Resources (CTR) and EnergySource Minerals have established operations in Imperial County to extract lithium from geothermal brine.”
  4. “Redwood Materials will discuss a pilot, in partnership with Ford and Volvo, for collection and recycling of end-of-life lithium-ion batteries at its Nevada based facilities to extract lithium, cobalt, nickel, and graphite.”
  5. “Tesla intends to source high-grade nickel for EV batteries from Talon Metals’ Tamarack nickel project.”
  6. “DOE, DOD, and the Department of State signed a memorandum of agreement (MOA) to better coordinate stockpiling activities to support the U.S. transition to clean energy and national security needs.”

The winners of the U.S. critical minerals policy should be those with projects in the USA which are focused on critical minerals (rare earths, lithium, cobalt, nickel, graphite), critical minerals processing and critical minerals recycling. Needless to say, they will need to pass environmental and permitting rules and support local communities and American jobs.

Of the companies mentioned above, MP Materials and Talon Metals are the only two that are listed. BHE Renewables, Controlled Thermal Resources (CTR), EnergySource Minerals, and Redwood Materials are all private companies.

MP Materials Corp.

MP Materials Corp. (NYSE: MP) owns and operates the Mountain Pass open pit rare earths mine facility, located in Mountain Pass, California, USA. Mountain Pass plans to have an output containing 5,000 metric tons of neodymium and praseodymium (NdPr), starting in ~2022. MP Materials also plan to have their own Heavy Rare Earth separation facility at their Mountain Pass Mine. As discussed above MP Materials have now been awarded a DoD contract (refer to the US$35 million in point 2 above). MP Materials Chairman and CEO, James Litinsky, stated: “The ability to mine, process, and refine rare earths at Mountain Pass is foundational to a national effort to secure the U.S. rare earth supply chain……We thank the Department of Defense for its confidence and support.”

MP Material’s stage III plan is to develop a rare earth metal, alloy and permanent magnet manufacturing facility in Fort Worth, Texas. MP Materials has an agreement to supply General Motors (GM) with magnets to be used in EV motors for the Hummer EV, Cadillac Lyriq, Chevrolet Silverado EV, and more than a dozen models using GM’s Ultium platform.

Talon Metals Corp.

Talon Metals Corp. (TSX: TLO) has a JV with Rio Tinto (ASX: RIO) at their Tamarack nickel-copper-cobalt Project in Minnesota, USA. Talon owns 50% but can earn-in to a 60% share of the Project. Talon recently announced a 5-year nickel supply agreement with Tesla (NASDAQ: TSLA).

Other critical mineral companies with USA projects

Lithium – Lithium Americas Corp. (NYSE: LAC | TSX: LAC), Standard Lithium Ltd. (TSXV: SLI | NYSE.A: SLI), Piedmont Lithium Inc. (NASDAQ: PLL | ASX: PLL) (have a supply deal with Tesla), Cypress Development Corp. (TSXV: CYP | OTCQX: CYDVF), Ioneer Ltd (ASX: INR), Albemarle Corporation (NYSE: ALB).

Cobalt – Jervois Global Limited (ASX: JRV | TSXV: JRV), Electra Battery Materials Corporation (TSXV: ELBM | OTCQX: ELBMF) (previously First Cobalt), Global Energy Metals Corporation (TSXV: GEMC | OTCQB: GBLEF).

Graphite – Westwater Resources, Inc. (NYSE American: WWR), Syrah Resources Limited (ASX: SYR) (spherical graphite plant planned for USA).

Nickel – Global Energy Metals Corporation (TSXV: GEMC | OTCQB: GBLEF).

Rare Earths – Lynas Rare Earths Limited (ASX: LYC) (rare earths processing plant planned for USA).

Li-ion batteries – Magnis Energy Technologies Limited (ASX: MNS) – New York battery factory.

Li-ion battery recycling – Li-Cycle Holdings Corp. (NYSE: LICY) – Partnership with GM and LGES’s Ultium JV for a battery recycling facility in Ohio.

Closing remarks

In addition to the above-mentioned companies with U.S. projects it should be noted that allied countries such as Canada and Australia will also be needed to help supply critical materials. Several of these companies can be found here in our InvestorIntel member’s page.

The USA’s domestic production of green energy and the associated need for critical materials supplies has long been a major weak point for the USA to compete with China. It does look like the USA is finally taking some actions to catch up, albeit still about a decade behind China.

Investors can look to play this catch-up trend, and as we saw with Tesla, if you invest early the sky is the limit.

Disclosure: The author is long Tesla (NASDAQ: TSLA), MP Materials (NYSE: MP), Lithium Americas (TSX: LAC), Piedmont Lithium (ASX: PLL), Jervois Global (TSXV: JRV), Electra Battery Materials (TSXV: ELBM), Syrah Resources (ASX: SYR), Lynas Rare Earths (ASX: LYC), and Magnis Energy Technologies (ASX: MNS).

Asset Class Winners and Losers if Russia Invades Ukraine

As Russian troops gather at the Ukraine border a war looks imminent. U.S intelligence has warned that Russia is likely to invade Ukraine as early as this week. Investors can look at ways to protect and position their portfolio if the Russian invasion goes ahead, as is widely expected.

Based on the February 27, 2014, Russian invasion that took control of the Crimean Peninsula from Ukraine, any invasion may meet with limited resistance. The 2014 invasion and takeover of Crimea was completed in only a month. Of course, on this occasion the whole of Ukraine is at risk and the Ukrainian military response should be a lot greater.

Russia and Ukraine look to be on the brink of war

Russia – Ukraine War

Source: iStock

Sanctions on Russia will likely be the key response from the West

If Russia invades then the most likely outcome is that very heavy sanctions will be imposed on Russia by at least the U.S, UK, and the European Union. Goods and services likely to be sanctioned could be the import of any military hardware & software, semiconductors, smartphones, critical metals etc. There would also likely be financial sanctions that act to block western finance to Russia and Russian companies as well as US dollar transactions. Russian exports (with gas and perhaps oil excluded) may also be sanctioned, which could lead to price spikes in key commodities and metals (palladium, iron ore, nickel, aluminum, or uranium) that Russia exports. For example, the Russian company Norilsk Nickel is the world’s leading palladium and nickel producer; the Russian company Rusal is a large global aluminum producer; and much of the world’s uranium comes from Russia, and Russian controlled companies such as those operating in Kazakhstan.

Ukraine would also be heavily impacted by a Russian invasion, which would interrupt Ukrainian businesses. Ukraine is well known for its fuel and non-fuel resources production and mining industry, including natural gas, oil, coal, iron ore, chalk, limestone, and manganese ore. Manufacturing is also a major business in Ukraine and includes automotive, shipbuilding, aircraft & aerospace. Ukraine is also a strong agricultural producer that helps to feed Europe. Key Ukrainian agricultural products include corn, wheat, sunflower oil, sugar, dairy, meats, honey, and nuts.

Ways to protect your portfolio

Some of the safe havens in times of conflict include:

  • Cash (U.S dollar, Japanese Yen, Swiss Franc).
  • U.S Government bonds.
  • Physical Gold, and quality gold producing mining companies.
  • Rotating some money out of risky assets.
  • Reducing exposure to Europe.

Possible winners if Russia invades Ukraine

  • Global energy companies due to increased price of oil and gas. Leading non-Russian gas and oil companies include Exxon Mobil Corporation (NYSE: XOM), BP plc (NYSE: BP), and Chevron Corporation (NYSE: CVX).
  • Global metal companies (palladium, iron ore, nickel, aluminum, uranium). For palladium consider South African Sibanye Stillwater Limited (NYSE: SBSW). For iron ore and nickel consider Brazil’s Vale S.A. (NYSE: VALE), or Australia’s BHP Group Limited (NYSE: BHP). For aluminum consider China’s Chalco (SHA: 601600) or America’s Alcoa Corp. (NYSE: AA). For uranium consider Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) or Ur-Energy Inc. (NYSE American: URG | TSX: URE).
  • Military related stocks as the West supports Ukraine and other parts of Europe with access to the latest weapons as a counter to Russian expansion in Europe. Consider the iShares U.S. Aerospace & Defense ETF (ITA) or the more aggressive Direxion Daily Aerospace & Defense 3X Shares ETF (DFEN). More details on the top defense stocks in my recent InvestorIntel article are here.
  • Agricultural stocks. Given Ukraine is a food bowl of Europe, then any significant disruption to the Ukraine agricultural sector could force up prices for grains such as corn, wheat, and sunflower oil.
  • Cybersecurity stocks may be a winner if Russia responds to the West with cyber-attacks. Consider buying the ETFMG Prime Cyber Security ETF (HACK).
  • Inverse or Bear ETFs that short the market or the currency. As there is no current Russia short ETF (Direxion Daily Russia Bear 3x Shares (RUSS) ETF closed in 2020) or short Russian ruble ETF to my knowledge, one option would be ProShares Short Euro (EUFX) or ProShares UltraShort Euro (EUO) for shorting the Euro currency. These are only suited to day trading and sophisticated investors.
  • Shorting individual Russian stocks.

Possible losers if Russia invades Ukraine

  • Russian ruble currency, Ukrainian currency (the hryvnia).
  • Russian stocks and the Russian stock market index (eg: iShares MSCI Russia (ERUS)).
  • Companies that have significant exports to, or revenues from, Russia as Russia may impose countersanctions or suffer a sharp slowdown. Examples include Veon (NASDAQ: VEON), Mobile TeleSystems (NYSE: MBT), EPAM Systems (NYSE: EPAM), Playtika (NASDAQ: PLTK), QIWI (NASDAQ: QIWI), and Ozon Holdings (NASDAQ: OZON).

Closing remarks

When Russia invaded Ukraine in 2014 the immediate impact saw the Russian stock market index fall ~11%, European stock indexes fell (Germany fell 3.3%), and the Russian ruble fell to a record low. US shares fell about 1.3% and money flowed into US bonds, gold and safe haven currencies. Rotating some funds from risky assets into safe havens right now looks to be a good idea.

Apart from what’s mentioned in the article, investors should also consider using any significant dip in global share markets as an opportunity to buy, as any contained Russia/Ukraine conflict should not have a lasting impact on the world. I will most likely use any market dip to top up on some of my favorites such as Alphabet Inc. (NASDAQ: GOOG) and Tesla Inc. (NASDAQ: TSLA), as well as some well valued EV metal miners.

Finally, there is also the risk that Russia backs down or de-escalates and we get no Ukraine invasion. In that case, most of the stocks and ETFs in this article are likely to fall back after a recent run up as invasion risks have been an issue for some months now.

At the rate of escalation, we should know what the outcome is probably within the next month or two. Feel free to post your thoughts and idea in the comments section below.

Energy Fuels is now producing uranium, vanadium, and mixed rare earths, a first in the world accomplishment

Earlier this week I discussed a rare earths and uranium ‘junior’; but today I take a look at a uranium/vanadium and rare earths ‘producer’ that continues to do well over the years by navigating successfully the market’s highs and lows and more recently expanding into rare earths processing/production.

The Company is Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR). Energy Fuels is the number one uranium producer in the U.S. and has the potential to become one of the lowest-cost, non-Chinese rare earth producers in the world. In its latest move the Company is looking at commercially developing a newly applied (to rare earths) technology to produce rare earth metals and alloys, a step down the supply chain and higher up the value-add chain.

Below is their stock price chart which is quite impressive given the uranium bear market from 2014 to 2021, when many uranium miners went out of business.

Energy Fuels 5 year stock price chart

Source: Yahoo Finance

Rare earths processing business

In the past year, Energy Fuels has expanded to also become a processor/producer of commercial mixed rare earths. Energy Fuels is buying U.S sourced rare earths’ ore and then processing it to produce a mixed rare earth carbonate using its existing, operational, White Mesa Mill. The Company states: “Because our product is ready for separation into individual rare earth oxides without further processing, we are currently producing an intermediate rare earth product in a more advanced form than any other U.S. company. We will be receiving additional shipments of natural monazite sand in…. 2022, and we are in advanced discussions with several monazite suppliers around the world to secure a diverse supply of feed for this exciting initiative.”

MOU for the development of a novel technology for the production of rare earth element metals

As announced on December 15, 2021 Energy Fuels has executed an MOU with Nanoscale Powders LLC  (NSP) for the development of a newly applied technology for the production of rare earth element metals. The release stated: “We believe this Technology, which was initially developed by NSP, and will be advanced by the Company and NSP working together, has the potential to revolutionize the rare earth metal making industry by reducing costs of production, reducing energy consumption, and significantly reducing greenhouse gas (GHG) emissions. Producing REE metals and alloys (REE Metals) is a key step in a fully integrated REE supply chain, after production of separated REE oxides and before the manufacture of neodymium iron boron (NdFeB) magnets used in electric vehicles (EVs), wind generation and other clean energy and advanced technologies…… Energy Fuels’ initial investment in the Project is intended to advance the Technology to allow for: (i) the continuous, pilot-scale production of 10 kilograms per hour of neodymium-praseodymium (NdPr) metal that meets typical specifications for NdFeB magnets at TLR Level 7; (ii) the separate build of a batch reactor able to produce key minor magnet metals (e.g., dysprosium, terbium); and (iii) the demonstration of samarium-cobalt alloy production…..The MOU contemplates a phased development of the Project to scale-up to the production of 1,000 metric tonnes of one or more REE Metals per year. Energy Fuels will have the right to earn up to a 100% interest in the entity and Technology.”

Note: Bold emphasis by the author.

Existing uranium and vanadium business

Energy Fuels has the largest uranium resource portfolio in the U.S. among producers, with an ability to rapidly scale up low-cost U.S. uranium and vanadium production if needed.

With the recent tight supply situation for uranium, Energy Fuels is now looking at entering again into long term uanium supply contracts. The Company states: “We believe this new dynamic could create opportunities for Energy Fuels to enter into long-term supply contracts for a portion of our production with nuclear utilities at prices, quantities and other terms that generate sufficient project cashflow, all while keeping the majority of our production leveraged to further potential increases in uranium prices.”

Energy Fuels White Mesa Mill and a list of their businesses

Source: Company presentation

Closing remarks

The smartest mining companies these days are able to quickly adapt to price swings in the commodity markets as well as bring on new products. Even better to be able to sell value-added products and form an integrated supply chain in the USA.

In the case of Energy Fuels, they now offer investors so much more than a year ago, including:

  • Uranium/vanadium production that can rapidly scale when needed from their existing mines and Mill.
  • Mixed rare earths carbonate production using the White Mesa Mill.
  • Potentially, in the near future, rare earth metals production using a novel production technology with their agreement to buy 100% of Nanoscale Powders LLC. If successful, Energy Fuels believes “Nanoscale’s metal-making technology could be orders of magnitude safer and less expensive than the current established technology.”

Finally, if we do happen to get a Russian invasion of Ukraine there is also the possibility we may get interrupted supply of Russian sourced uranium if sanctions are applied. That could potentially send uranium prices higher.

2022 looks set to be another good year for Energy Fuels. Their market cap is US$1.03 billion after a recent dip, so worth a look for investors wanting to gain U.S exposure to uranium, vanadium, and rare earths.

All Eyes on Australia in 2022 as a Global Rare Earths Production Leader

The rare earths sector, particularly the rare earth magnet metals (such as neodymium (Nd)), had a great 2021; but given that the electric vehicle (EV) and clean energy booms are just getting started, 2022 should be another strong year. The most powerful electric motor magnets used today are known as permanent magnets, and they typically are made of neodymium iron boron (NdFeB). Dysprosium (Dy) and praseodymium (Pr) are also commonly used in permanent magnets.

As shown below, neodymium prices had a very strong 2021 reflecting a very strong demand for permanent magnets used in powerful electric motors. It is interesting to note the correlations of price and EV car sales from the chart below especially when considering that the peak months for global electric car sales in 2021 were March, June, October, November, and most likely December (usually the best month of the year).

If you think electric car sales will boom again in 2022 and throughout the decade (as I do), then there is a strong case for owning the rare earth miners of these key magnet metals.

Neodymium 1 year price chart – Currently at CNY 1,110,000/t (USD 174,134/t)

Source: Trading Economics (red arrows by the author to show peak e-car sales months in 2021)

Where is the opportunity in rare earths?

Most rare earths reserves are found in China, followed by Vietnam, Brazil, Russia, India, Australia and the USA. Canada also has some rare earths. Most of the global rare earths production is from China followed by USA and Australia.

For Western investors, the two largest rare earths producing mines are owned by Lynas Rare Earths Limited (ASX: LYC) and MP Materials Corp. (NYSE: MP). A third smaller producer is Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR), which, however, is a processor, not a rare earth miner.

For investors looking at the next potential rare earths producer then best to look to Australia and Canada. Today I will focus on Australia.

Australian rare earth miners

Lynas Rare Earths Limited (ASX: LYC) (Lynas)

Lynas is the second largest NdPr producer in the world. Lynas owns the Mt Weld rare earth mine and Concentration Plant in Western Australia (WA), one of the world’s highest grade rare earths mines. Lynas ships concentrate from WA to their Malaysian plant for separating and processing into commercial rare earths’ materials. As part of their 2025 plan, Lynas is progressing their new Kalgoorlie Rare Earths Processing Facility in WA as well as their LRE/HRE separation & specialty materials facility in the USA.

Boosted by strong prices and production (5,461t of NdPr in FY 2021), Lynas reported record sales of A$498 million and a record profit of A$157 million in FY 2021. I would expect this to continue in 2022.

Lynas is no longer cheap and trades on a market cap of A$9.69 billion, and a 2022 PE of 24.9. A top tier Western rare earths (NdPr) producer.

Australian Strategic Materials Limited (ASX: ASM) (ASM)

Australian Strategic Materials is an emerging integrated producer of critical metals for advanced and clean technologies based in Australia and South Korea. ASM plans a “mine to metal” strategy to extract, refine and manufacture high-purity metals and alloys that they can then supply directly to global manufacturers. ASM plans to produce a range of high-purity metals, alloys and powders from their metals plant in South Korea. Products will include titanium, zirconium and rare earths, required for permanent magnet production with the raw materials initially sourced from the market. The plan is to later source some materials internally, notably from their flagship Dubbo Project.

The Dubbo Project deposit contains rare earths, zirconium, niobium and hafnium. The Dubbo Project is ready for construction, subject to financing. In December 2021 ASM announced an updated base case in which the 20-year life of mine is expected to achieve a pre-tax NPV of A$2,361 million and a pre-tax project internal rate of return of 23.5%.

In November ASM announced the commissioning of their Korean Metals Plant in Ochang Province, South Korea. In December ASM announced they had formed a JV with Resource Corporation (KOMIR) (formerly known as Korean Resources Corporation (KORES)) to enable the supply of critical minerals and metals into Korea.

Korea is a tech-based manufacturing powerhouse, and this JV is very timely as non-Chinese tech manufacturers try to wean themselves from dependence on China-centric supply chains.

ASM trades on a market cap of A$1.34 billion.

Arafura Resources NL (ASX: ARU) (Arafura)

Arafura own the shovel ready Nolans rare earths (NdPr) Project in the Northern Territory of Australia. Arafura is aiming to be a trusted global leader for sustainably mined and processed rare earth products and plans to mine and process ore to separated commercial oxides at a single site at their Nolans Project. The main focus being to produce NdPr oxide. The Project has all Federal & NT Environmental approvals secured and Government and Minister support for A$300 million senior debt facility. Basically, the Project is ready to go subject to final project funding being secured. Subject to that funding, first production is targeted to begin late 2024.

Arafura trades on a market cap of A$333 million.

An interesting side note to end on is that Arafura quote:

  • EV market growth is exponential: 10 to 40 times in the next 20 years. This will require 615 times more rare earth elements.
  • Most EVs need about 1kg of rare earths for their motor magnets.
  • Just 0.05% of the vehicle cost: but it can’t run without it.
  • Market analysts forecast a supply gap that represents 109% of global supply today and is in excess of 11 Nolans Projects.”

Source: Arafura Resources October 2021 company presentation

Closing remarks

We should remember that in 2021 the Morrison led Australian Government announced a A$2 billion loan facility for Australian critical minerals projects. These funds have the potential to help Australian rare earths juniors to move towards production.

Combine this with high magnet rare earths prices and surging demand, and we have all the ingredients for a strong 2022 from the Australian rare earths’ miners.

Welcome to the Future, Critical Metals’ Ventures Discover Reality

Way back in 2011 there were nearly 250 rare earth themed junior mining ventures looking at 400 “deposits” mainly in Canada and Australia. Today, just two of them are producing, Lynas Rare Earths Limited (ASX: LYC) and MP Materials Corp. (NYSE: MP) (the successor in interest to the bankrupt Molycorp of yore). These two ventures, even then, stood out from the pack by their common purpose of delivering a value-added product, individual separated (or blended) rare earth chemical forms, in the case of Lynas, and “magnets,” in the case of Molycorp. All of the others, without exception, stated that their saleable product would be a “mixed con.” This was the great “con” of the rare earths’ boom and bust of 2010-2013.

A concentrate of a mixture of all of the rare earths, from which the chemical elements that interfere with the separation of those rare earths into individual, or purposely blended combinations, of individual rare earth salts, is what is targeted to be produced at a mining operation where the ore is “mined,” concentrated, cracked and leached, and then is chemically processed to remove elements that interfere with the next step, selective separation of the individual elements in a form required for the next step in the supply chain that ultimately results in a finished product for sale to consumers.

For the rare earths this concentrate is, for practical purposes of safety and economics, a mix of rare earth carbonate solids. This should have been the initial target of 2011’s 250 rare earth juniors. It wasn’t. They overwhelmingly (other than Lynas and Molycorp) did nothing to advance towards this target. That turned out to be a good thing, because the only non-Chinese customers for this “mixed con” before 2017 were Solvay in France (9,000 tpa capacity to produce individual rare earth salts), Silmet in Estonia (2,500 tpa), and assorted small operations in Asia, outside of China, with a combined capacity of perhaps 3,000 tpa. All of these bought their feedstock from China or (a tiny amount) from Russia at the time.

No 2011 junior sold a single gram of mixed con to the marketplace prior to 2017 (Lynas)

Why was the first 21st century, rare earth boom, such a bust?

Because none of them had the knowledge, education, experience or skill in processing or mineral economics to see that integration into a total rare earths supply chain targeted to a final product is necessary for profitable operation. Almost without exception the profitable part of the rare earth supply chain is concentrated in the metals, alloys, and magnet making end, and the only way to make a mine and separation system profitable is to distribute costs along a total supply chain. (America’s Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR), which is operating on a total supply chain model through magnet alloys, is an exception, because it is able to make a profit selling a mixed carbonate due to the skill of its administrative and operation management and a unique, for North America, existing processing infrastructure).

If there is to be a domestic American, or European, total rare earth permanent magnet supply chain then there will have to be in place operating commercial rare earth separation systems, rare earth metals and alloys production, and rare earth permanent magnet production capability and capacity to support it.

In fact, if there are to be total domestic supply chains for any critical metals, then, not just a mine, but also all of the downstream elements of the supply chain have to be in place before that can happen.

I note that for the cobalt chemicals necessary for the production of lithium-ion battery cathodes, the Canadian integrated cobalt processing junior, Electra Battery Materials Corporation (TSXV: ELBM | OTCQX: FTSSF), has entered into a supply agreement for cobalt concentrates from the world’s largest non-Chinese producer, Glencore, to process that concentrate into fine cobalt chemicals for the battery manufacturing industry in its existing Canadian facility. When and if Electra can produce cobalt concentrates from its company-owned deposits there will already be in place the downstream operations to support that. In the meantime, it will buy feedstocks from others, and/or also toll them for others. Electra’s management looks also to have given considerable thought to pricing, so as to ensure profitability.

This business model, to have in-house as much of the total final product supply chain as is necessary to be profitable, is the only practical business model for the production of critical metals and materials.

As of December 31, 2021, America’s Energy Fuels (rare earths) and Canada’s Electra (cobalt) are setting the pace for the future development of a North American critical metals’ industry by commencing operations.

Happy New Year!

Critical Minerals Corner: Jack Lifton & Christopher Ecclestone on the Rare Earths Market

In this episode of the Critical Minerals Corner, Tracy Weslosky is joined by Critical Minerals industry expert and InvestorIntel Editor in Chief Jack Lifton and Christopher Ecclestone, Principal and mining strategist at Hallgarten & Company about the demand and supply gap in the rare earths supply chain and about the key developments in the North American rare earths space.

In this InvestorIntel interview, Christopher went on to say that there are not enough players in the market to produce sufficient rare earths for the electric vehicle transformation. Jack further added that the only country self-sufficient in critical rare earths is China and explained why the US still lags far behind while Europe has already acknowledged the need for rare earths.

Disclaimer: This interview, which was produced by InvestorIntel Corp. (IIC) does not contain, nor does it purport to contain, a summary of all the material information concerning the “Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete. If you have any questions surrounding the content of this interview, please email info@investorintel.com.