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Net Zero Carbon and other “planning dilemmas” Part 2

In Part 1 of this series, I introduced the concept of going to the plan’s end result and working backwards through the planning process. I recommend this for some of the more difficult planning tasks, as it eases the mental burden. By that I mean, when faced with the challenge of planning for the world to meet a net zero carbon by 2050, the mental challenge is enormous. So, let’s break it down.

A world that is meeting a net zero carbon target by 2050 will have to have achieved many linked but somewhat individual tasks and schedules. There are simply too many individual tasks to list, so I’m going to try and sub-group so that we can at least get a conceptualized overview of the challenges ahead.

  1. Physical Resources.
  2. Technology.
  3. ESG Concerns.
  4. Power Requirements.
  5. Human Resources.

I’ll try and cover each sub-group and provide linkages as we develop our thoughts. FYI. I have heeded my own advice here and started the process from the end and worked backwards. What you’ll see are my thoughts and impressions formulated over many years in Critical Materials, ESG management, and planning, coming together hopefully with each article to get us all on board and with a clearer, more transparent, an honest view of the Net Zero Carbon issue, a Net Zero future and its requirements.

OK. Let’s start with Physical Resources. You will have all been made aware by various reports that the amount of Physical Resources required for electric cars, wind turbines, solar power farms etc. is enormous. If not gigantic. It is certainly numbers of orders of magnitude bigger than current production levels. It is staggering to try to imagine 10 times (for example) the production of lithium, copper, chromium, rare earths, etc not to mention the steel and aluminum required for associated infrastructure. But let’s put the issue of scale aside for the moment. I want to first dispel the notion that recycling will be the answer. I am not going to say that recycling is not important and should not be avidly pursued, but what I am saying is that recycling is not the “big-ticket” answer to the Physical Resources requirements. I’ll demonstrate with a mathematical exercise.

Let’s look at the current level of batteries (as an example). We need an assumptions list. We need a current output level, let’s use a starting point of 100 units. Each battery will last 10 years. The growth in the need for batteries is positive 10% per year. These absolute numbers are not really important in this discussion. It is the understanding of where they take us that’s important. OK. Question one – how much recycling can you do in year 1? Answer – None. There are no batteries to be recycled. They last for ten years! So not until year 11 are batteries available for recycle and these are the now “dead” year 1 units. 100 of them only. Then 110 in year 12. 121 in year 13.

I know I have simplified the situation but as I will repeat throughout this series of articles, it’s the overall impact that needs to be understood, not the detail as such. Look at the following table of units needed to meet demand, the resources needed versus the effectiveness of recycling capacity.

Year Batteries Demand Additional Capacity to supply Recycle Available Cumulative Additional Capacity Utilize Recycle to get new Capacity
1 100 0 0 0 0
2 110 10 0 10 10
3 121 21 0 31 31
4 133 33 0 64 64
5 146 46 0 110 110
6 161 61 0 171 171
7 177 77 0 248 248
8 194 94 0 352 352
9 213 113 0 465 465
10 234 134 0 599 599
11 258 158 10 757 747

So, it’s not until year 11 that recycled batteries have any effect. The battery demand and the resources required will have increased between 6 and 8 times by then. In fact, it won’t be until at least year 15 that any noticeable effect of recycling will be noticed. So, recycling may be a small part of an eventual solution, but it is not the saviour. Only increased output is. And increases in mining, processing, refining and manufacturing of this scale is to say the least challenging. And to meet the time challenge of 2050?

Well, let’s muddy the waters of our planning process a little more and introduce the complication of co-dependence. And by that I want you to think about the example of making electric cars. To make one car you need enough of the various components to do that. Obviously! But what happens if you do not have any of component X? (Think of the current microchips issue for example). The whole schedule stalls until the production level of component X meets the needs for that volume of production. Now think back over the last ten years at the junior rare earths space. Why haven’t they developed the capacity to meet the predicted needs? Well, the end user, the car companies in this example, didn’t expand as fast as first thought (or is that hoped?) and the explorer couldn’t get market contracts to justify getting the development capital. So, the co-dependence of the car company and the junior explorer, stalled the junior’s development. In fact, it shut down many of the juniors. Those that managed to stay alive are now facing more years to get back up and the co-dependence will again surface as the slow ramp up of rare earths output will directly impact the growth of the output of electric cars! What is the impact of this co-dependence of mining development for the rare earths in the magnets needed for electric car output requirements in 2050? It will take some planning. Especially when you throw in the mix the co-dependence of all the other resources required, particularly those critical materials with a long timeline to development.

Another term I use is cross-dependence. Again, in the electric car example, the vertical supply chain for each element or assembly, or whatever, can be influenced by a separate although essential vertical supply chain. Let me explain. If you need as an example to create a vertical supply chain for each of three new components, say, the magnets (from rare earths), the batteries (from lithium) and microchips (from silica), will the planning process allow for the indefinite delay in one or more of the components? That is to say, can the rare earths development timeline needed for the magnets be affected by an extensive delay in the creation of a process, or development of the resource, for say, lithium? Or silica? Of course, it can. The justification for the planned development of one is impacted by the achieved development timeline of the others. The car needs a number of successful developments in critical minerals in separate supply chains (and other components) to reach the final stage, producing the required number of vehicles by the timeline stated. And they have to have matching timelines otherwise the imbalance will cause a market condition where the component being developed the fastest may be stalled by the delay in the component being developed the slowest. Although co-dependence is taught in most Economics courses, as it is standard supply chain logic, cross-dependence has become much more odious today as the need for new components comes to light. And this is only the Physical Resources. Can you see this isn’t a simple “Supply Chain” issue. Its not one component we are looking at here. It’s many. It’s a “Supply Array” issue!

Now we are getting started! Now consider the implications of the Republicans’ defeat at the last USA elections. Did that have implications for the 2050 target? You betcha! As will the EU response to the looming energy crisis across Europe this winter. I’ll call this dependence Geopolitical or GP-Dependence. So, we now have added another dimension to the planning process. The planning dilemma has to deal with a “Supply Matrix”! Wasn’t in my Economics 101.

Now, that’s just for electric cars! You now have to throw in co-dependence, cross-dependence and GP-dependence with all those other required developments that together meet the 2050 target, some of which it has been stated that the technology does not yet exist! And remember, all of these developments are competing for the same resources! The Critical Minerals at least. This “Planning Dilemma” is on a scale probably never seen in the Western World. Well, not since World War II.

I think that’s enough on the Physical Resources issue. There have been many articles, reports etc on this topic from others, but don’t forget the reasoning behind the issues of recycling, co-dependence,  cross-dependence and GP-dependence. It will come back later.

I’m looking forward to reviewing the Battle of the ESG Titans online debate as ESG is a passion of mine. Since the Battle was live at 3am Thursday morning 15th December in my part of Australia, I will change the order of the 5 sub-groups listed above for discussion. I’ll discuss ESG concerns next (article 3), to incorporate thoughts from The Battle, and discuss Technology in article 4.

I’m thinking: have a great time over the holidays, stay safe and see you next time.




Is American Rare Earths sitting on the largest rare earth deposit in the USA?

Commodities these days can be a bit of a fickle investment. They are definitely in demand for numerous reasons, including the world’s move towards a lower carbon future. Putin’s attack of Ukraine has placed further emphasis on security of supply, overall supply chains and the politics of commodities. However, we can’t seem to align all the interested parties into coming up with a cohesive game plan to maximize the production of critical commodities, while optimizing their environmental and social impact.

What do I mean by this? In late February the White House ordered action across the US Federal Government to secure reliable and sustainable supplies of critical minerals and materials just before the first anniversary of Executive Order (EO) 14017, America’s Supply Chains. However, a year after detailed reports of vulnerabilities in the critical mineral and material supply chains were produced by US federal agencies, detailing the over-reliance of the U.S. on foreign sources and adversarial nations for critical minerals and materials, posing national and economic security threats, the U.S. government isn’t exactly walking the walk. In the last year, we’ve seen Rio Tinto’s (NYSE: RIO) Resolution copper project in Arizona and Antofagasta’s (LSE: ANTO) Twin Metals project (copper/nickel) in Minnesota both get the red light from the Biden Administration. It has also taken steps to slow down development of a lithium mine in Nevada from ioneer Ltd. (ASX: INR) to help preserve a rare flower. You could also include Northern Dynasty Minerals Ltd.’s (TSX: NDM | NYSE American: NAK) Pebble mine in Alaska in this list because there is a lot of copper as part of the resource, but to me, it’s more of a gold mine so not necessarily critical.

I’m not saying that these actions to delay or cancel projects aren’t justified for environmental and social reasons. I’m simply pointing out that it’s easier said than done. Investors can’t simply pick all the companies pursuing critical minerals in the U.S. and think it’s going to be a slam dunk. Certainly, there is a renewed focus on addressing the critical minerals and materials supply chain, but it likely won’t come at the expense of the neighbors of these projects. That’s why one has to look a little deeper at any potential investments to ensure the project has a chance to see the light of day. You can’t just have a viable, economic resource, you need to tick a lot more boxes.

That’s my long-winded intro to an Australian listed company with assets in the growing rare earths sector of the United States, looking to help the U.S. diversify away from China’s market dominance of the global rare earth market. American Rare Earths Limited’s (ASX: ARR | OTCQB: ARRNF) mission is to supply critical materials for renewable energy, green tech, EVs, National Security, and a Carbon-Reduced Future. The Company owns 100% of the world-class La Paz Rare-Earth Project, located 200 km northwest of Phoenix, Arizona and the Halleck Creek rare earth project in Wyoming, USA. La Paz is a large tonnage, bulk deposit, that is potentially the largest rare earth deposit in the USA and benefits from containing exceptionally low penalty elements such as radioactive thorium and uranium. The Company is currently drilling in the new Southwest Zone of the project where an exploration target of approximately 742 – 928 million tonnes could be added to the 170.6 million tonne JORC compliant (Australian equivalent of NI 43-101) resource.

The size and the grades at La Paz are impressive, as well as close to surface, but remember it’s not just about an economic resource. The reason I think American Rare Earths should be on an investor’s watchlist, if you have any interest in the rare earths space, is their attention to politics. On March 4th the Company announced it had welcomed a delegation of elected officials from all levels of government to its flagship La Paz project. Key members of the group of 25 federal, state and county officials and staff delivered enthusiastic and encouraging speeches about American Rare Earths and its work underway to help secure the United States’ domestic critical minerals supply chain. Additionally, Company executive Marty Weems will speak to several dozen State Legislators about La Paz at an event held in collaboration with the Arizona Mining Association. That’s the type of proactive effort required to get your project to the finish line in the world of today.

From a macro perspective, there are significant tailwinds for domestic rare earths production from both a market pull and a government push. Additionally, there are several near-term catalysts for American Rare Earths with an on-going drill program at both properties and applications have been filed for 36 additional drill sites at La Paz. The Company is well funded, finishing 2021 with over A$8 million plus having raised another A$1.4 million in the first two months of 2022. With a market cap of roughly A$161 million (US$ 117 million) it’s not your typical junior mining stock, but then again, your typical junior mining stock isn’t sitting on potentially the largest rare earth deposit in the USA.




Four major mining industry takeaways from the 2022 Canadian Federal Budget

In this InvestorIntel interview with host Tracy Weslosky, CBLT Inc.’s (TSXV: CBLT) President, CEO and Director Peter Clausi discusses the four major mining industry takeaways from Canada’s 2022 Federal Budget.

In the interview, which can also be viewed in full on the InvestorIntel YouTube channel (click here), Peter Clausi talks about four major items in the budget that affect the mining industry, including $1.5 billion to support the domestic critical minerals industry with new infrastructure and “access to federal data”, and the proposed flow-through increase to 30% of the new Critical Mineral Exploration Tax Credit. He also discusses the $70 million earmarked to research and develop small modular reactors as a major policy shift towards reconsidering nuclear power, and the importance of partnering with First Nations.

To watch the full interview, click here

About CBLT Inc.

CBLT Inc. is a Canadian mineral exploration company with a proven leadership team, targeting lithium, cobalt and gold in reliable mining jurisdictions. CBLT is well-poised to deliver real value to its shareholders.

To learn more about CBLT Inc., click here

Disclaimer: CBLT 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 about the content of this interview, please contact us at +1 416 792 8228 and/or email us direct at [email protected].