Gina Rinehart, Australia’s wealthiest individual, has recently expanded her investment portfolio through several strategic acquisitions, focusing on the mining sector, specifically in critical minerals. As the Executive Chairman of Hancock Prospecting Pty Ltd., Rinehart has driven her company’s interest in global mining projects, leveraging opportunities in South America and rare earth elements to diversify away from traditional iron ore.

In a notable expansion into South America, Hancock Prospecting entered into a significant agreement with Titan Minerals Ltd. (ASX: TTM). The deal, announced on April 17, 2024, involves an investment of up to $120 million in drilling and exploration at the Linderos copper-gold project in Ecuador. Initially, Hancock will pay $2 million for a 5% stake in the project, with the potential to scale up to an 80% ownership as exploration progresses.

This move comes on the heels of another major acquisition in Ecuador where Hancock purchased a 49% stake in a state-owned mining company for $120 million in March 2024. This acquisition included six mining concessions in northern Ecuador, illustrating Rinehart’s aggressive approach to expanding her mining interests in regions with rich mineral reserves.

Moreover, Rinehart has significantly increased her stakes in the rare earths market, a strategic move reflecting global shifts in the supply chains for these critical minerals. Hancock Prospecting recently acquired a nearly 6% stake in Lynas Rare Earths Ltd. (ASX: LYC), a leading non-Chinese rare earths developer. This purchase was announced in mid-April 2024 and is part of a broader strategy to influence the rare earths market, which is crucial for modern technologies such as electric vehicles and wind turbines.

Additionally, Rinehart’s Hancock Prospecting bought a 5.3% stake in MP Materials Corp. (NYSE: MP), another significant player in the rare earths sector, based in the United States. This transaction was part of a series of acquisitions in the same week and followed the stalled merger discussions between Lynas and MP Materials in February 2024.

Rinehart’s investments are not confined to new projects; she has also been increasing her holdings in existing ventures. Notably, her firm supported the Arafura Rare Earths Limited‘s (ASX: ARU) project in Australia’s Northern Territory, which received a substantial government backing of A$840 million in grants and loans last month. This project is aligned with the Australian government’s initiative to boost national critical minerals supply.

Gina Rinehart’s recent activities underscore her transition from a dominant iron ore mogul to a pivotal figure in the critical minerals sector. Her actions are setting the stage for Australia and its allies to diminish their reliance on China, fostering a more diversified and secure global supply chain. With her extensive resources and strategic acumen, Rinehart is not just investing in minerals; she’s investing in the future stability and security of technology and renewable energy resources worldwide. As the world pivots towards a more sustainable and politically neutral resource base, Rinehart’s role will likely be viewed as both visionary and vital.

Welcome to the latest issue of the Technology Metals Report (TMR), brought to you by the Critical Minerals Institute (CMI). In this edition, we compile the most impactful stories shared by our members over the past week, reflecting the dynamic and evolving nature of the critical minerals and technology metals industry. Among the key stories featured in this report are President Joe Biden’s initiatives to restrict Chinese electric vehicles (EVs) citing national security concerns, the American Council for an Energy Efficient Economy’s report naming the Toyota Prius Prime SE as the greenest car in America, and insights into the lithium market with investors remaining keen despite a price plunge. We also delve into the broader context of these developments, including the potential solution to the rare earth crisis through tetrataenite, BYD’s exploration for a factory location in Mexico, and the ongoing challenges and opportunities facing the global electric vehicle and critical minerals markets.

This week’s report also highlights various strategic collaborations and developments, including the significant challenge posed by China’s EV industry to Detroit’s Big Three automakers and Australia’s navigation of a critical minerals market meltdown amidst declining prices for key exports such as iron ore, nickel, and lithium. Furthermore, we cover Lynas Rare Earths Ltd.’s (ASX: LYC) call for government vigilance in the volatile nickel market, China’s lithium-ion battery industry facing excess inventory and production capacity issues, Energy Fuels Inc.’s (NYSE American: UUUU | TSX: EFR) record net income and uranium production ramp-up, and Mercedes-Benz’s adjustment of its electrification goal. These stories underscore the rapidly changing landscape of the technology metals and critical minerals industry, spotlighting strategic collaborations, market dynamics, and the critical role of innovation and policy in shaping the future of sustainable technology and energy.

Biden Calls Chinese Electric Vehicles a Security Threat (February 29, 2024, Source) — President Joe Biden has initiated measures to potentially restrict the entry of internet-connected Chinese electric vehicles (EVs) into the U.S. market, citing national security concerns over their ability to transmit sensitive data to Beijing. The Commerce Department has launched an investigation into these security threats, marking the beginning of a broader strategy to prevent low-cost Chinese EVs from undermining U.S. automakers. This move comes amid growing tensions between the U.S. and China over trade and technology, with Biden emphasizing the need to protect the domestic auto industry from unfair Chinese practices. The investigation, a result of discussions with major automakers and unions, could lead to new regulations on vehicles using Chinese software, which is feared to collect extensive data on American users. This action is part of Biden’s wider efforts to bolster U.S. technology restrictions against China and maintain competitiveness in the global auto market.

The ‘greenest’ car in America might surprise you (February 29, 2024, Source) — A new report from the American Council for an Energy Efficient Economy challenges the common perception that electric vehicles (EVs) are the greenest cars in America by naming the Toyota Prius Prime SE, a plug-in hybrid, as the top environmentally friendly vehicle. The Prius Prime SE can travel 44 miles on electricity before switching to hybrid mode, combining electric and gasoline power. The report assesses over 1,200 vehicles on their road and manufacturing emissions, including pollutants beyond carbon dioxide. Despite the growing market for EVs, the report emphasizes that a car’s green credentials depend on factors like weight, battery size, and overall efficiency, not just its electric capabilities. Plug-in hybrids like the Prius Prime offer a balance for drivers by allowing short electric commutes and longer gas-powered trips, presenting a practical alternative amidst America’s evolving charging infrastructure. Critics argue that fully electric vehicles remain the best option for environmental benefits, especially as renewable energy sources increase. However, the report suggests the importance of offering consumers a range of environmentally friendly choices to suit different needs.

Lithium Investors Are Looking Beyond Price Plunge, Chile Minister Says (February 28, 2024, Source) — Despite a recent downturn in lithium prices, investors remain keen on new lithium projects in Chile, as confirmed by the country’s Mining Minister, Aurora Williams. This interest is fueled by the long-term prospects associated with the global shift towards renewable energy and electric vehicles, rather than short-term price fluctuations. Chile, home to the world’s largest lithium reserves, has seen prices drop significantly since the introduction of a new public-private partnership model aimed at attracting investment while ensuring major deposits remain under state control. Despite this, major international companies like Rio Tinto Group and Tsingshan Holding Group have continued discussions with Chilean authorities, demonstrating a sustained interest in the sector. Chile plans to offer exploration rights in certain salt flats, with the possibility of private investors gaining either minority or majority stakes depending on the strategic importance of the area. This initiative is part of a broader effort to maintain Chile’s status as a key player in the global lithium market, amidst growing competition and as the country also seeks to bolster its position in the copper industry.

Navigating the Climate Change Storm of ESG Withdrawal and Climate Change Commitment (February 28, 2024, Source) — Recent decisions by JPMorgan, State Street, and Pimco to exit Climate Action 100+ (CA+), amid political pressures, have sparked debate over the fate of global ESG initiatives. Nevertheless, CA+’s extensive network, including over 700 members and its collaborations with high-emission companies for a low-carbon transition, exemplifies the resilience of ESG efforts. Despite these withdrawals, the broader commitment to ESG principles, especially in the extractive industries with initiatives like Copper Mark and Responsible Steel, remains robust. This commitment is further reinforced by regulatory measures against greenwashing and heightened public activism for environmental protection and equitable benefits. These trends underscore that, far from diminishing, ESG remains a crucial driver of corporate strategy and societal expectations, suggesting a sustained impact on global business practices.

Tetrataenite as a solution to the rare earth crisis (February 28, 2024, Source) — The rare earth crisis, pivotal for modern technologies such as electric motors and wind turbines, stems from the scarcity and environmental impact of mining rare earth elements like yttrium and neodymium. As demand for these materials grows due to their importance in reducing fossil fuel reliance and combating climate change, shortages are anticipated. A potential breakthrough in 2023 by an international research team suggests tetrataenite, a meteorite mineral with similar magnetic properties to rare earths, as a solution. Unlike its natural slow formation in space, the team discovered a method to synthesize tetrataenite on Earth rapidly using common materials like iron, nickel, and phosphorous, potentially offering an alternative to address the rare earth crisis.

Chinese automaker BYD looking for Mexico plant location, executive says (February 28, 2024, Source) — Chinese electric vehicle manufacturer BYD is scouting locations in Mexico for a new factory, targeting the local market to enhance its share, as stated by BYD Americas CEO Stella Li. With an annual production capacity of 150,000 cars, the company plans to finalize the plant location by year-end. Recently surpassing Tesla in global EV sales, BYD’s expansion into Mexico signals a potential competitive challenge to U.S. auto companies, amidst concerns from the Alliance for American Manufacturing about low-cost Chinese cars impacting the U.S. auto sector’s viability. BYD’s strategy focuses on serving the Mexican market, particularly eyeing central and southern regions for factory sites. The company’s cost competitiveness is attributed to early investments in EV technology and extensive vertical integration. BYD also announced the launch of its Dolphin Mini EV in Mexico, priced significantly lower than the cheapest Tesla, aiming to make electric cars accessible to more Mexican consumers. However, challenges remain, such as the limited network of charging stations in Mexico.

China’s Electric Vehicles Are Going to Hit Detroit Like a Wrecking Ball (February 27, 2024, Source) — China’s electric vehicle (EV) industry, led by automakers like BYD, poses a significant challenge to Detroit’s Big Three (Ford, General Motors, and Stellantis). Despite recent profits and optimistic forecasts for 2024, these American giants are struggling with their EV sales goals amidst the rapid emergence of affordable and efficient Chinese EVs. BYD, in particular, has sold millions of electrified vehicles, expanding its global manufacturing footprint to meet increasing demand. The competitive pricing and technological efficiency of Chinese EVs underscore China’s evolving industrial capabilities, transitioning from basic manufacturing to complex, high-tech production including cars and batteries. This shift represents a broader challenge to American automakers, who must navigate a changing market landscape while addressing structural vulnerabilities in their business models, heavily reliant on sales of trucks and SUVs to a niche market. The U.S. government faces a delicate balance of supporting domestic industries through subsidies and trade restrictions while fostering a competitive environment that encourages innovation and adaptation to the global shift towards electrification.

Australia’s Precarious Position: Navigating a Critical Minerals Market Meltdown (February 26, 2024, Source) — Australia is at a critical juncture, facing a significant downturn in the prices of key exports such as iron ore, nickel, and lithium, which underscores the country’s vulnerability due to its heavy reliance on these commodities and its dependence on China, its main buyer. The global implications of this market meltdown are profound, with the economic viability of mining and refining operations being challenged, as demonstrated by Lynas Rare Earths Ltd.’s (ASX: LYC) struggles at its Kalgoorlie ore processing plant. The decline in the nickel industry has uncovered manipulations of market prices, reflecting China’s strategic dominance over the global supply chain for rare earth elements and other critical minerals. In response, Australia is attempting to reduce dependence on Chinese processing by offering subsidies to local mining and processing operations, while also dealing with the economic repercussions of collapsing metal prices. This situation necessitates a strategic reevaluation of Australia’s role in the global minerals market, exploring options like underwriting national processing facilities to enhance the value of its mineral exports and diversify its economic base amidst changing global trade dynamics.

Rare earths leader Lynas warns govt on nickel fallout (February 26, 2024, Source) — Lynas Rare Earths Ltd. (ASX: LYC), a leading rare earths producer, has highlighted the importance of government vigilance in response to the nickel market’s volatility and its broader impact on the mining sector. The company reported a 74% decrease in net profit to $39.5 million for the half-year ending December 31, attributing this decline to subdued prices for critical minerals, largely due to China’s dominance in supply. Despite the market challenges, Lynas, the largest producer of rare earths outside China, emphasizes its strategy of being a low-cost producer to sustain profitability even in a weak market. Lynas is expanding its operations, including projects in the United States, and making contingency plans for potential disruptions in supply chains, such as sourcing sulphuric acid due to the possible closure of BHP’s nickel refinery. The company’s experience underscores the interconnected nature of the minerals industry and the need for strategic planning and government engagement to ensure resilience and competitiveness, especially in securing sovereign supplies of critical minerals.

China’s lithium-ion battery industry faces excess inventory, production capacity as EV market downshifts: industry analysts (February 25, 2024, Source) — China’s lithium-ion battery industry, pivotal in the global EV market, is navigating through a phase of excess inventory and production capacity due to decreased demand for electric vehicles. Analysts predict a challenging year ahead, with companies facing losses amidst a price war triggered by overcapacity. The situation has led to significant price drops in lithium carbonate and battery cells, exacerbated by reduced subsidies for EVs. With production far exceeding installation into products, further price declines are expected. The market is undergoing a clearing phase, with expectations of breaking even next year. Investment in new capacity is likely to decelerate. Despite a forecasted slowdown in domestic EV sales growth, the global lithium market faces a ballooning excess supply, raising concerns over the long-term growth prospects for lithium. Top battery and lithium mining firms may only see profitability by 2025, as the industry grapples with these challenges.

Energy Fuels Announces 2023 Results: Record Net Income and Earnings per Share, Uranium Production Ramp-Up, and Near-Term Production of Separated Rare Earth Elements (February 23, 2024, Source) — In 2023, Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) announced significant achievements including a record annual net income of nearly $100 million and the commencement of uranium production across three mines, aiming for a production rate of 1.1 to 1.4 million pounds per year by mid-to-late 2024. The company highlighted a strong balance sheet with over $220 million in liquidity and no debt. Revenue was primarily driven by uranium sales, with significant contributions from rare earth elements (REE) and vanadium. The sale of the Alta Mesa project funded investments in uranium and REE production. Energy Fuels is preparing for the near-term production of separated REEs, anticipating to become a leading producer outside of China. With a focus on growth, the company is also exploring expansions into additional uranium and REE sources, aiming to significantly increase production capabilities while capitalizing on market opportunities in both sectors.

Mercedes-Benz delays electrification goal, beefs up combustion engine line-up (February 22, 2024, Source) — Mercedes-Benz announced a postponement of its electrification target by five years, aiming for electrified vehicles to comprise up to 50% of its sales by 2030, a shift from the initial 2025 goal focused mainly on all-electric cars. This adjustment reflects a broader trend among automakers recognizing the slower-than-anticipated adoption of electric vehicles (EVs), as investments in EV technology and capacity have surpassed current demand. CEO Ola Kaellenius highlighted that even in Europe, a complete switch to electric vehicles by 2030 is unlikely, noting that EVs currently represent a small fraction of total sales. Mercedes-Benz reassured investors and customers of its commitment to refining its combustion engine vehicles alongside its EV ambitions, with plans for a significant lineup refresh by 2027. The announcement, coupled with a €3 billion share buyback program, positively impacted the company’s stock, which saw a 5.9% increase. However, challenges such as economic slowdowns, supply chain issues, and geopolitical tensions have led the automaker to anticipate lower sales and reduced profitability for 2024.

Investor.News Critical Minerals Media Coverage:

• February 28, 2024 – Navigating the Climate Change Storm of ESG Withdrawal and Climate Change Commitment https://bit.ly/3SXymnP
• February 26, 2024 – Australia’s Precarious Position: Navigating a Critical Minerals Market Meltdown https://bit.ly/3uWQoOZ

Investor.News Critical Minerals Videos:

• February 29, 2024 – PDAC President Raymond Goldie Bolsters Toronto’s Status as Global Mining Investment Capital in Lead-Up to PDAC 2024 https://bit.ly/42VBDss

Critical Minerals IN8.Pro Member News Releases:

• March 1, 2024 – Voyageur Pharmaceuticals Ltd. Announces Closing of Private Placement https://bit.ly/432eRzi
• February 29, 2024 – Ucore Rare Metals to Present at the 2024 PDAC Conference https://bit.ly/3TglcUa
• February 28, 2024 – First Phosphate and Craler Sign MOU for the Development of Global Logistical Competencies to and from the Saguenay-Lac-St-Jean region of Quebec, Canada https://bit.ly/49xD5DI
• February 27, 2024 – American Rare Earths to present at two leading industry conferences in March PDAC and International Battery Seminar https://bit.ly/49uaFuu
• February 27, 2024 – Nano One Commences Feasibility Study for First Commercial LFP Plant and “Design-Once-Build-Many” Growth Strategy https://bit.ly/3TaFtum
• February 27, 2024 – Media Advisory – Neo Performance Materials Inc. Fourth Quarter 2023 Earnings Release & Conference Call https://bit.ly/3uSkeUQ
• February 26, 2024 – Appia Reports High-Grade Total Rare Earth Oxide Results up to 22,339 ppm or 2.23% on Diamond Drill Hole #1 Within Target IV at PCH IAC Project, Brazil https://bit.ly/48DKQHe
• February 26, 2024 – Kraken Energy Commences Drilling at Harts Point & Provides Corporate Update https://bit.ly/49r02bS

Australia, often celebrated as the world’s quarry, finds itself at a critical juncture as the prices of iron ore, nickel, and lithium, three of its most significant exports, have plummeted. This decline has not only exposed the inherent vulnerabilities of relying heavily on these commodities but has also highlighted the country’s dependence on China, its largest buyer. This situation is further compounded by the realization that the wider global implications of such a downturn are largely overlooked by many in the field.

Jack Lifton, the co-founder of the Critical Minerals Institute (CMI), points out that the economic feasibility of mining and refining operations is predicated on the massive demand from major players. The recent challenges faced by Lynas Rare Earths Ltd.’s (ASX: LYC) Kalgoorlie ore processing plant exemplify the precarious nature of these operations. The plant, initially constructed to comply with Malaysian regulations against importing radioactive materials, now struggles with the fallout from BHP Group’s (ASX: BHP | NYSE: BHP) decision to shut down local nickel operations, a key source of sulphuric acid, due to dwindling demand.

The repercussions of these developments are far-reaching. The collapse of the nickel industry, for instance, has revealed a manipulation of market prices reminiscent of supermarket-style scandals, but on a much grander scale. This, coupled with China’s strategic dominance over the global supply chain for rare earth elements and other critical minerals, poses a significant threat not just to Australia but to the global balance of power in the minerals market.

China’s strategy has been multifaceted, involving not only the subsidization of production costs at every step but also a willingness to absorb the environmental costs associated with such operations. This approach has allowed China to assert near-monopolistic control over the processing of about 80% of the world’s rare earths, and critical components like lithium, gallium, and germanium. The implications of this dominance are profound, affecting everything from the global race to combat climate change to the strategic military balance between major world powers.

Australia’s response to this challenge has been twofold. On one hand, it has attempted to leverage its rich deposits of critical minerals by offering subsidies to mining and processing operations in a bid to reduce dependence on Chinese processing facilities. On the other hand, the Australian government has had to contend with the immediate economic fallout from the collapse of metal prices, including providing emergency corporate aid and grappling with the loss of thousands of jobs as companies reassess the viability of their operations.

The situation is further complicated by China’s apparent readiness to use its economic power to coerce or punish countries that challenge its interests, as seen in the imposition of trade restrictions and embargoes on Australian exports following diplomatic tensions.

As Australia navigates this precarious situation, several paths forward emerge. One involves underwriting the construction of national processing facilities to add value to its mineral exports, potentially offering a cleaner alternative to Chinese-processed materials. This approach, however, would require a significant shift from recent trends towards privatization and might necessitate substantial investment to make Australia a competitive player in the global market for processed minerals.

Ultimately, Australia’s challenge is not just about responding to immediate economic pressures but about rethinking its strategic position in a rapidly changing global market. The country’s ability to adapt to these changes, diversify its economic base, and negotiate the complex interplay of global trade and politics will determine its future role on the world stage.

To stay up to date with the Critical Minerals Market, click here to join the CMI. A complimentary resource library that tracks the critical mineral lists from the USA to Australia to the UK may be accessed here.

Welcome to the latest issue of the Technology Metals Report (TMR), brought to you by the Critical Minerals Institute (CMI). In this edition, we compile the most impactful stories shared by our members over the past week, reflecting the dynamic and evolving nature of the critical minerals and technology metals industry. From the Inflation Reduction Act’s challenges for the American EV industry to China’s lithium market developments and Treasury Secretary Janet Yellen’s strategic visit to Chile, our report covers a wide array of developments crucial for stakeholders. The unveiling of Tesla Inc.’s (NASDAQ: TSLA) lithium refinery in Texas, alongside CATL’s confirmation of its lithium mine’s normal operations, paints a picture of the industry’s efforts to navigate through pricing volatilities, supply chain complexities, and geopolitical tensions. Moreover, the significant moves by major financial institutions in the uranium market and Gecamines’ strategic overhaul in the DRC underline the shifting paradigms in the mining and investment landscapes of technology metals.

This TMR report also highlights the broader implications of these developments on the global stage, including efforts to diminish reliance on China for essential metals, the impact of Tesla’s pricing strategies on the used EV market, and the strategic dialogues around rare earths markets. The visit by US Treasury Secretary Janet Yellen to Chile is spotlighted as a key initiative to bolster ties around critical minerals, emphasizing the urgency of diversifying supply chains amid growing demands for green transition materials. Additionally, the narrative around the challenges posed by the Inflation Reduction Act for Tesla and the US car industry, coupled with BHP’s cautionary stance on the Australian nickel sector, illustrates the complex interplay between policy, market dynamics, and strategic resource management. As we delve into these stories, our aim is to provide a comprehensive overview that informs and stimulates discussion among policymakers, industry leaders, and stakeholders, navigating the intricate pathways towards a sustainable and competitive future for critical minerals and technology metals.

MP Materials swings to quarterly loss on falling rare earths prices (February 22, 2024, Source) — MP Materials Corp. (NYSE: MP) reported a fourth-quarter loss, attributed to declining rare earths prices and increased production costs, despite expectations of a larger deficit. Amidst unsuccessful merger discussions with Lynas Rare Earths Ltd. (ASX: LYC) and competition from Chinese firms, CEO Jim Litinsky emphasized the potential for mutual learning and cost reduction among companies. Despite a 2.7% drop in shares on Thursday, a slight recovery was observed in after-hours trading. The company experienced a significant shift from previous year’s profit to a $16.3 million loss. Sales of rare earths concentrate to China decreased by 34% due to lower production at its Mountain Pass mine, exacerbated by facility issues. However, MP is advancing in refining rare earths domestically, with ongoing projects in California and Texas, and has initiated production in a new facility in Vietnam.

Stalling the American EV Industry: The Unintended Consequences of the Inflation Reduction Act’s Attempt to Bypass China for Critical Minerals (February 22, 2024, Source) — The Inflation Reduction Act (IRA), integral to President Joe Biden’s environmental strategy, seeks to transition the American automotive industry towards a US-centric electric vehicle (EV) supply chain, reducing reliance on Chinese materials. This shift, exemplified by initiatives like Tesla Inc.’s (NASDAQ: TSLA) lithium refinery in Texas, aims to enhance the competitiveness of American-made EVs. However, the IRA’s stringent requirements for sourcing materials domestically or from approved countries by 2024 pose significant challenges, complicating efforts by major manufacturers to maintain affordability and quality. Jack Lifton, an expert in the field, highlights the complexity of creating a new EV supply infrastructure and the strategic challenges of overtaking China’s advanced position in the EV sector. The article emphasizes that realizing the IRA’s vision demands innovation, strategic foresight, and time, presenting both obstacles and opportunities for the U.S. automotive industry in its quest for sustainability and energy independence.

Battery factories: Europe’s mechanical engineering companies are lagging behind (February 22, 2024, Source) — The report “Battery Manufacturing 2030: Collaborating at Warp Speed” by Porsche Consulting and the German Engineering Federation (VDMA) highlights the expansion of battery factories, with around 200 set to be constructed worldwide in the next decade, predominantly in Europe. Despite this growth, European mechanical engineering firms are trailing behind their Asian counterparts, particularly in supplying high-tech equipment for these factories, with only 8% of such technology currently coming from Europe. This low market share limits Europe’s influence on technical development in the battery sector. The study suggests that to avoid technological dependency and enhance their market position, European companies must aim for at least a 20% market share, requiring significant growth and collaboration to offer integrated factory solutions competitive with turnkey plants from China. The study emphasizes the potential for growth and the critical need for European firms to innovate and collaborate to secure a substantial stake in the rapidly expanding battery production technology market, estimated at 300 billion euros by 2030.

“This is a very important article, because it illustrates that the EV battery manufacturing industry has become technologically dependent upon Chinese manufacturing technology for efficient and economical production. Is this the beginning of the end for any attempt by the non-Chinese world to catch up? No, we’ve already reached that point, and what other manufacturing industries in the West are circling the drain?” – Jack Lifton, CMI Co-Chair & Co-Founder

China’s CATL says its lithium mine operating normally (February 22, 2024, Source) — Chinese battery giant Contemporary Amperex Technology Co. (CATL) has confirmed that its lithium mine in Jiangxi province is operating normally, amidst market speculation of a halt due to falling lithium prices. The Jianxiawo mine, rich in hard rock lepidolite and a subsidiary of CATL, faced rumors of reduced or stopped production due to economic challenges. However, CATL asserts production is ongoing as planned, despite market rumors suggesting otherwise. After the Lunar New Year holiday, it was noted that only one of two production lines resumed operation. The mine, which began phase-one production recently, aims for a 200,000 tons capacity of lithium carbonate equivalent (LCE) upon completion of all phases. Despite high production costs compared to current market prices, analysts predict significantly lower output this year than initially expected, with potential delays in future expansion due to these costs. The speculation had earlier boosted Australian lithium stocks.

China’s lithium carbonate futures jump on talk of environmental crackdown (February 21, 2024, Source) — On Wednesday, China’s lithium carbonate futures prices experienced a significant rally, driven by market speculation regarding potential environmental inspections in a key production area. This speculation raised concerns about possible output restrictions, leading to a 6.35% increase in the most-active July contract on the Guangzhou Futures Exchange, reaching 99,600 yuan per metric ton. Speculation centered around Yichun, a major lithium production city in Jiangxi province, facing environmental checks that could limit operations for producers failing to properly manage lithium slag. Despite these rumors, major producers in Jiangxi continued their operations as planned, with some undergoing scheduled maintenance. The price surge, reflecting concerns over supply constraints, followed a rally in Australian lithium stocks prompted by rumors that Chinese battery maker CATL had closed its Jianxiawo mine.

Yellen to Visit Chile in Push to Boost Ties on Critical Minerals  (February 21, 2024, Source) — US Treasury Secretary Janet Yellen is scheduled to visit Chile next week as part of an effort to strengthen the United States’ ties with Chile, focusing on the South American nation’s significant role in the green transition through its contribution to renewable energy policies and as a supplier of critical minerals. This visit is a strategic move by the US to diversify its critical minerals supply chain and reduce its dependence on China, which currently leads the market for essential metals necessary for energy transition technologies. Chile, possessing one of the world’s largest lithium reserves, is seeking foreign investment to expand its capacity within the global battery supply chain. The visit, which follows Yellen’s attendance at a G20 finance ministers’ meeting in Sao Paulo, aims to deepen bilateral economic relations, particularly in the context of Chile’s potential to benefit from President Biden’s green stimulus program due to a free-trade agreement with the US, thereby supporting North American electric vehicle production.

Tesla’s price cuts are driving down car values so much that EV makers are sending checks to leasing firms to compensate them (February 21, 2024, Source) —  Tesla’s price reductions have significantly lowered the resale value of used electric vehicles (EVs), prompting automakers to issue compensation to leasing companies like Ayvens to cover these losses. This adjustment comes as the industry is pushed to sell more EVs to avoid fines, with leasing firms seeking protections against further depreciation in the $1.2 trillion second-hand car market. The demand for used EVs fell due to Tesla’s price cuts, affecting companies that play a vital role in the corporate car market. To mitigate risks of depreciation, negotiations for buyback agreements and re-leasing options are underway. Regulatory pressures for lower fleet emissions compound the issue, as unstable used-EV pricing challenges the transition to electric mobility by 2035. Corporate shifts, like SAP SE discontinuing Teslas for employees, underscore the broader impacts of volatile EV pricing on the industry.

Biden’s EV Dreams Are a Nightmare for Tesla and the US Car Industry (February 20, 2024, Source) — The Inflation Reduction Act (IRA), initiated by President Joe Biden to foster a US-centric electric vehicle (EV) supply chain and reduce reliance on Chinese components, poses significant challenges for Tesla and other American car manufacturers. Despite Tesla’s initial steps towards compliance, including sourcing batteries from within the US and building a lithium refinery in Texas, the company’s substantial procurement of Chinese lithium-ion batteries underscores the complexity of shifting away from China’s supply network. The IRA mandates stringent sourcing requirements for battery components and raw materials, aiming to cut China’s dominance in the EV sector. However, these measures have compelled carmakers to navigate a difficult transition, risking the affordability and competitiveness of EVs. As Tesla, GM, Ford, and others strive to adapt to these evolving standards and develop alternative supply chains, they face the daunting task of balancing economic, environmental, and strategic objectives in a rapidly changing global market dominated by geopolitical tensions and the strategic distribution of critical minerals.

Goldman, hedge funds step up activity in physical uranium as prices spike (February 20, 2024, Source) — Investment banks Goldman Sachs and Macquarie, along with some hedge funds, are increasingly engaging in the uranium market, driven by a spike in uranium prices to 16-year highs. While many banks remain cautious, these institutions are actively trading physical uranium and, in Goldman’s case, its options. This shift is fueled by utilities’ need for new supplies amid shortages. The interest in uranium is also growing among hedge funds and financial institutions, a notable change after the sector’s stagnation post-Fukushima disaster. Uranium prices have doubled over the past year, reaching $102 a pound, prompted by production cuts from top producers and a renewed interest in nuclear energy as a means to reduce carbon emissions. Goldman Sachs has also introduced options on physical uranium for hedge funds, marking a significant development in the market. This increased activity reflects a broader appeal of uranium to financial investors, with notable investments in physical uranium as well as equities related to the sector.

Gecamines plans overhaul of mining JVs in world’s top cobalt supplier (February 20, 2024, Source) — Gecamines, the state miner of the Democratic Republic of Congo, is seeking to renegotiate terms of its copper and cobalt joint ventures to increase its stakes and gain more control. Aiming to leverage global demand for minerals essential for the green energy transition, Gecamines plans to secure better off-take contracts and ensure local representation on venture boards for improved asset management. The strategy addresses past oversights, focusing on rectifying prolonged indebtedness and insufficient investment by some partners. Recent deals, like the one with China’s CMOC Group, exemplify Gecamines’ efforts towards securing equitable terms, demonstrating a push for enhanced returns, community benefits, and transparency in the world’s top cobalt supplier and a leading copper producer.

Industry Leaders Lifton and Karayannopoulos China’s Influence on Rare Earth Prices and Markets Today (February 19, 2024, Source) — In an insightful interview, Jack Lifton and Constantine Karayannopoulos delve into the complexities of the rare earths market. Karayannopoulos, wary of current market trends, notes a decline in prices for key elements like neodymium and praseodymium and maintains a cautious outlook due to the industry’s cyclical nature. Lifton points out the impact of China’s economic struggles on low rare earth prices, advocating for strategic investments in mining and processing at this juncture. Both experts discuss the discrepancy between market expectations and reality, particularly in the context of China’s economic growth and the slower-than-anticipated expansion of its magnet industry, vital for electric vehicle production. They emphasize the significance of investing in raw materials and processing to navigate and leverage China’s market dominance effectively, offering a comprehensive view on economic trends, geopolitical strategies, and investment opportunities in the rare earths sector.

BHP says Australian support for nickel miners ‘may not be enough’ to save industry (February 19, 2024, Source) —  BHP Group (ASX: BHP | NYSE: BHP) warned that Australian government efforts to support the nickel industry might not suffice amid challenges, as a write-off in its nickel operations led to a nearly 90% drop in first-half net profit. The crisis in Australia’s nickel industry is due to a price collapse from a supply glut in Indonesia. Despite government measures like production tax credits and royalty relief, BHP’s CEO, Mike Henry, suggested these might be inadequate due to structural market changes. BHP, facing a $3.5 billion pre-tax impairment charge on its Nickel West operation, is contemplating suspending its activities there, despite healthy nickel demand from the electric vehicle sector. However, Henry highlighted copper, potash, and iron ore as stronger growth areas for BHP. The company announced a higher-than-expected interim dividend, reflecting robust copper and iron ore performance, and anticipates stability in commodity demand from China and India.

US Bid to Loosen China’s Grip on Key Metals for EVs Is Stalling (February 19, 2024, Source) — The U.S. is striving to diminish its reliance on China for crucial metals like gallium and germanium, vital for electric vehicles and military technology. Efforts have been hampered by the diminished efficacy of the U.S. National Defense Stockpile and budget cuts, revealing vulnerabilities to supply shocks. Despite the Biden administration’s initiatives to diversify metal sources through international deals and domestic projects, China’s control over the global metal supply remains strong. Recent legislative reforms aim to enhance strategic stockpiling and procurement flexibility, but challenges in establishing a coherent strategy and securing stable mineral supplies continue. The situation underscores the complex dynamics of global supply chains and the critical nature of these metals for technological and defense applications.

JPMorgan, State Street quit climate group, BlackRock steps back (February 15, 2024, Source) — JPMorgan Chase and State Street’s investment arms exited the Climate Action 100+ coalition, a global investor group advocating for reduced emissions, withdrawing nearly $14 trillion in assets from climate change initiatives. BlackRock scaled back its participation by shifting its membership to its international arm. These moves follow the coalition’s request for members to intensify actions against companies lagging in emission reductions. Despite political pressure from Republican politicians accusing financial firms of antitrust and fiduciary duty breaches, none cited politics as a reason for their departure. State Street cited conflicts with the coalition’s new priorities, which include engaging policymakers and public emission reduction commitments, as misaligned with its independent approach. BlackRock aims to maintain independence while prioritizing climate goals for its clients.

Investor.News Critical Minerals Media Coverage:

• February 22, 2024 – Stalling the American EV Industry: The Unintended Consequences of the Inflation Reduction Act’s Attempt to Bypass China for Critical Minerals https://bit.ly/3T8IpYE
• February 22, 2024 – Revolutionizing Energy Storage with NEO Battery Materials’ Strategic Advances in Silicon Anode Technology https://bit.ly/3T5rO80

Investor.News Critical Minerals Videos:

• Industry Leaders Lifton and Karayannopoulos China’s Influence on Rare Earth Prices and Markets Today https://bit.ly/3SNSuZk

Critical Minerals IN8.Pro Member News Releases:

• February 22, 2024 – American Rare Earths Announces A$13.5m Placement to advance Halleck Creek Project https://bit.ly/3wuU1fB
• February 22, 2024 – First Phosphate Project Receives Letter of Support from Mario Simard, Canadian Parliamentary Deputy for the Riding of Jonquière, Québec https://bit.ly/3SQAP3i
• February 21, 2024 – Nano One Adds 4 More Lithium Battery Manufacturing Patents in Asia – Boosts Total to 40 https://bit.ly/3I6EmFL
• February 21, 2024 – Power Nickel Expands on High Grade Cu-Pd-Pt-Au-Ag Zone 5km northeast of its Main Nisk Deposit https://bit.ly/433eJj3
• February 20, 2024 – American Clean Resources Group Acquires SWIS Community, LLC, an Environmental Water Technology Company https://bit.ly/3T6iSis
• February 20, 2024 – First Phosphate Provides Update on Plans for a Purified Phosphoric Acid Plant at Port Saguenay, Quebec https://bit.ly/4bINVs4
• February 20, 2024 – Western Uranium & Vanadium Receives over $4.6M from Warrant Exercises https://bit.ly/3UI3DxH
• February 20, 2024 – Appia Unveils Significant REE, Cobalt and Scandium Assay Results From 47 RC Drill Holes at the Buriti Target Within Its PCH IAC REE Project, Brazil https://bit.ly/3ST4GIG
• February 20, 2024 – Fathom Nickel Announces the Closing of Its Second and Final Tranche of Private Placement https://bit.ly/3wjSSr7
• February 20, 2024 – Canadian GoldCamps to Earn 50% of Murphy Lake for $10M Exploration Spend https://bit.ly/4bBbtz0

To become a Critical Minerals Institute (CMI) member, click here

Welcome to the latest Technology Metals Report (TMR) where we highlight the top news stories that members of the Critical Minerals Institute (CMI) have forwarded to us in the last week. Key highlights in this Technology Metals Report include significant developments such as Appia Rare Earths & Uranium Corp. enriching its advisory committee with the appointment of industry veteran Constantine Karayannopoulos, a move poised to strengthen its strategic capabilities in the critical minerals sector. Additionally, stories highlighted last week include Ford Motor Company’s substantial $4.7 billion loss in its electric vehicle (EV) segment for 2023, a figure that underscores the economic challenges facing companies transitioning to electric mobility.

Moreover, this edition of the TMR delves into Bora Mining Services’ strategic acquisition in the Steenkampskraal Monazite Mine and the landmark $18.8 billion cathode supply deal between General Motors and LG Chem, both of which underscore the strategic efforts to secure critical materials for the burgeoning EV market. The report also examines Hitachi Construction Machinery’s innovations with its all-electric dump truck prototype, signaling a push towards sustainability in mining operations. Commentary on the EV market by industry expert Jack Lifton highlights the sector’s challenges and misalignments with consumer preferences. Furthermore, Canada’s advancement over China in the BloombergNEF Global Lithium-Ion Battery Supply Chain Ranking and the discontinuation of merger talks between Lynas Rare Earths and MP Materials are highlighted, reflecting the dynamic nature and strategic maneuvers within the global critical minerals and electric vehicle sectors.

Appia Appoints Constantine Karayannopoulos as New Member to Its Critical Minerals Advisory Committee (February 9, 2024, Source) — Appia Rare Earths & Uranium Corp. (CSE: API | OTCQX: APAAF) announced the appointment of Constantine Karayannopoulos to its Advisory Committee, alongside rare earths experts Jack Lifton and Don Hains. Karayannopoulos, with a 30-year career in the rare earth and critical minerals sectors, including as President and CEO of Neo Performance Materials Inc. (TSX: NEO), brings significant expertise to Appia. His background includes pivotal roles in the industry, such as leading the first foreign company in China’s Rare Earth industry and co-founding Neo Lithium Corp. His appointment, starting February 1, 2024, is set to enhance Appia’s strategic capabilities in the critical minerals sector, supported by his consulting company, Kloni Inc. Appia has granted 300,000 options to Kloni Inc. as part of this agreement.

Rare Earths Discovery Near Wheatland So Big It Could Be World Leader (February 7, 2024, Source) — American Rare Earths Limited (ASX: ARR | OTCQB: ARRNF) has made a groundbreaking discovery near Wheatland, Wyoming, revealing 2.34 billion metric tons of rare earth minerals, significantly surpassing initial estimates and other local discoveries. This positions Wyoming as a key player in reducing reliance on China’s rare earth market, vital for green energy technologies. With only 25% of their land explored, the potential for further discoveries is immense. The company, part of an Australian enterprise, plans scalable mining operations to meet the high global demand. This development, along with other explorations in Wyoming, could transform the U.S. into a major source of rare earth minerals, essential for a range of advanced technologies. Further economic and development projections are anticipated, underlining Wyoming’s emerging significance in the global rare earth industry.

Ford Lost $4.7B On EVs Last Year, Or About $64,731 For Every EV It Sold (February 7, 2024, Source) — Ford Motor Company’s venture into electric vehicles (EVs) in 2023 resulted in a significant financial loss, overshadowing its overall profits for the year. The company experienced an operating loss of $4.7 billion from its EV business, termed as “Model e,” despite achieving a net income of $4.3 billion on $176 billion revenue. This loss equates to approximately $64,731 for each of the 72,608 EVs sold last year, demonstrating the financial challenge of transitioning to electric mobility. The loss was attributed to competitive pricing, strategic investments in new EV development, and exceeded Ford’s initial projections. The automotive giant’s commitment to EVs, which includes a $50 billion investment plan, has been questioned in light of these results. Additionally, Ford’s EV production adjustments and the broader automotive industry’s challenges with EV demand and profitability highlight the difficulties in achieving widespread EV adoption. This situation reflects broader market trends and concerns over the viability and appeal of EVs, particularly in markets dominated by conventional vehicles and specific demographic niches.

Bora Mining Acquires Share in Steenkampskraal Monazite Mine (February 7, 2024, Source) — Bora Mining Services (BMS) has acquired a share in Steenkampskraal Monazite Mine (SMM), a high-grade rare earths and thorium mine, to commence operations in early 2024. With a significant investment, including a R1 billion infrastructure, BMS aims to refurbish and develop the mine, leveraging its expertise in mining operations. The mine boasts an impressive 14.5% average grade of total rare earth oxides, with potential for resource expansion. The partnership focuses on producing monazite concentrate initially, with plans to extend production to mixed rare earth carbonate and thorium. The project has received positive feedback from regulatory bodies and has a dynamic growth strategy across three phases, eventually aiming to produce individual rare earth oxides. The initiative is expected to cater to global rare earth demands, with thorium also highlighted for its safety and potential in cancer therapy.

South Korea’s LG Chem signs $19 bln cathode supply deal with General Motors (February 7, 2024, Source) — General Motors (GM) and South Korea’s LG Chem have signed a $18.8 billion deal for cathode material supply, enhancing GM’s electric vehicle (EV) production chain from 2026 to 2035. This partnership aims to support the production of 5 million high-performance EVs, with LG Chem’s Tennessee plant serving as a cornerstone for a localized supply chain. The agreement, building on a prior commitment for over 950,000 tons of Cathode Active Material, signifies a major step towards sustainable EV production. The Tennessee facility, set to be America’s largest cathode plant, will primarily supply Ultium Cells LLC, a GM and LG Energy Solutions joint venture, potentially extending to other GM EV projects. This move aligns with U.S. Inflation Reduction Act criteria, emphasizing local supply chain benefits.

Hitachi launches final tests of its electric dump truck (February 6, 2024, Source) — Hitachi Construction Machinery has introduced a prototype of its all-electric dump truck, which is now undergoing final testing at a copper-gold mine in Zambia. Based on the EH4000AC-3 model with a 221-tonne payload, this electric version includes ABB’s battery technology and converters. Unlike its diesel counterpart, it operates on internal batteries on level ground and external trolley power uphill, while regenerative braking recharges the battery downhill. Performance details are pending, but the combustion engine model’s specs offer insight. This initiative, started in 2021 by Hitachi and ABB, aims to meet electric dump truck demand in mining and reduce emissions, highlighting a shift towards electrification in heavy machinery and contributing to environmental sustainability.

Riding the EV Revolution Rollercoaster Amid the West’s Electric Car Climbdown (February 5, 2024, Source) — Jack Lifton’s critique on the electric vehicle (EV) industry highlights the clash between government strategies and market dynamics, alongside the competitive pressure from Chinese manufacturers. He points out major manufacturers like Renault and Volvo retreating from ambitious EV projects due to mismatches in market demand and production costs. Jack also observes a consumer shift back to petrol models, suggesting a misalignment between EV production and consumer preferences. Advocating for hybrids, he emphasizes the need for adaptability, innovation, and market responsiveness. His insights stress the importance of aligning visionary goals with practical market demands and competitive challenges, underlining the complexity of navigating the evolving EV landscape with agility and foresight.

South African platinum industry could shed up to 7,000 jobs to cut costs (February 5, 2024, Source) — The South African platinum industry, responsible for about 70% of the world’s mined platinum, may cut 4,000 to 7,000 jobs due to restructuring amid high costs and declining prices. The Minerals Council highlighted this at the Investing in African Mining Indaba conference in Cape Town, noting the impact of the shift towards electric vehicles and the falling demand for platinum group metals (PGMs) used in traditional combustion engines. High electricity and labor costs, along with a 40% and 15% drop in palladium and platinum prices respectively, have pressured miners. Major companies like Anglo American Platinum and Sibanye Stillwater are considering operation restructuring and job cuts to reduce expenses, facing challenges from lower ore grades and rising input costs.

China Drops to Second in BloombergNEF’s Global Lithium-Ion Battery Supply Chain Ranking as Canada Comes Out on Top (February 5, 2024, Source) — Canada has taken the top spot in BloombergNEF’s Global Lithium-Ion Battery Supply Chain Ranking, outpacing China due to its ample raw materials, policy support, and strong ties with the US auto industry. This represents a significant shift, emphasizing the increasing importance of sustainability and ESG practices in the sector. North America shines in the rankings, with policy initiatives like the US Inflation Reduction Act bolstering the region’s standing. Mexico notably rose nine spots, benefiting from its industrial base and potential US policy impacts. Global investment in clean energy supply chains hit $135 billion, highlighting the sector’s growth and the evolving dynamics of trade relations. The ranking assesses countries on raw materials, manufacturing, demand, ESG, and innovation, reflecting the global push towards sustainable energy solutions.

Australia’s Lynas Rare Earths quits tie-up talks with MP Materials (February 5, 2024, Source) — Australia’s Lynas Rare Earths and U.S.-based MP Materials terminated merger discussions amid valuation disagreements and strategic considerations. The potential union aimed to bolster supply chain diversification for critical minerals outside China, which commands the rare earth market. The talks’ cessation reflects the complexities of consolidating operations within the global rare earths industry, crucial for technology and defense sectors. Despite the strategic intent to reduce reliance on Chinese rare earths, both companies faced hurdles, including technological challenges and anti-trust regulations. Lynas, with significant projects across Australia, Malaysia, and the U.S., and MP Materials, which relies on Chinese refining, concluded that the merger lacked sufficient synergies to proceed, underscoring the intricate dynamics of international rare earths commerce.

Canada Announces Over $4 million to Support Critical Minerals Value Chains and Create Good Jobs in Ontario (February 5, 2024, Source) — Canada is investing $4.2 million in Ucore Rare Metals Inc. through the Critical Minerals Research, Development, and Demonstration (CMRDD) program to enhance the country’s capabilities in producing critical minerals essential for the green and digital economy. This investment, announced by Mark Gerretsen, aims to scale up Ucore’s rare earth element separation technology, pivotal for electric vehicle motors and renewable energy technologies. It promotes domestic processing, reducing reliance on foreign separation and bolstering Canada’s electric vehicle value chain. This initiative will create employment, including for Indigenous communities, and support Canadian technological advancements in sustainable practices. It aligns with Canada’s commitment to a cleaner, low-carbon economy by fostering competitive value chains and economic growth.

Germany’s dream of 15 million electric vehicles is fading away (February 3, 2024, Source) — At a Berlin auto industry event, BMW CEO Oliver Zipse and Transport Minister Volker Wissing highlighted the slowdown in electric vehicle (EV) adoption in Germany. Despite previous optimism, challenges such as a saturated high-end market, lack of affordable options, dwindling government incentives, and inadequate charging infrastructure have emerged. With EV sales projected to drop and the ambitious goal of 15 million EVs by 2030 now looking unrealistic, the industry faces a pivotal moment. The need for diversified vehicle power solutions, including combustion, hybrid, and hydrogen vehicles, becomes apparent. Analysts are skeptical about meeting emissions targets without further subsidies, pointing to a broader slowdown that could impact investment and long-term environmental goals.

Special thanks to the Critical Minerals Institute – Leading the Critical Minerals Sector, for more information or to send us a highlighted industry story you think we need to include in our weekly Technology Metals Report, please send to Raj Shah – my co-editor, at [email protected]. Thank you.

Investor.News Critical Minerals Media Coverage:

• February 6, 2024 – Global Winds: Opening the Door for a New Middle Eastern Hegemon https://bit.ly/492BPbH
• February 5, 2024 – Riding the EV Revolution Rollercoaster Amid the West’s Electric Car Climbdown https://bit.ly/42oLYNn
• February 4, 2024 – Empowering Canadian Resource Exploration: The Strategic Role of Flow-Through Shares, and the Power of PDAC https://bit.ly/3uv4pmO

Investor.News Critical Minerals Videos:

• February 8, 2024 – Jack Lifton and Panther Metals Darren Hazelwood on the “greenstone belt for VMS deposits” in Canada https://bit.ly/42zDzqv
• February 8, 2024 – Fathom’s Ian Fraser on Rising Market Interest in Albert Lake and Nickel as a Critical Mineral https://bit.ly/49uxFcu
• February 5, 2024 – Tawana Bain and ACRG’s Drive for a Sustainable American Supply Chain through Net-Zero Mineral Production https://bit.ly/4bnBcLg
• February 5, 2024 – Terry Lynch on Power Nickel’s Ambitious 2024 Drilling Program at the Nisk Project in Nemaska https://bit.ly/49i7OEi
• February 5, 2024 – Voyageur Pharmaceutical’s Brent Willis on Revolutionizing the Medical Imaging Industry, plus SmoothX https://bit.ly/3SsrlLt

Critical Minerals IN8.Pro Member News Releases:

• February 9, 2024 – Ucore Announces Closing of Final Tranche of Upsized Debenture Offering https://bit.ly/49o07Na
• February 9, 2024 – Appia Appoints Constantine Karayannopoulos as New Member to Its Critical Minerals Advisory Committee https://bit.ly/3OCnNVL
• February 9, 2024 – American Rare Earths Limited: Appointment of Chairman – Richard Hudson https://bit.ly/3HU47Ji
• February 8, 2024 – Auxico Announces Sampling Results From a Geological Report on the Minastyc Property https://bit.ly/3UAtsj3
• February 8, 2024 – Fathom Announces Start of Drilling at Albert Lake Project https://bit.ly/499VW7K
• February 8, 2024 – Appia Announces Outstanding Re-Assayed Diamond Drill Results Including 100 Metres Averaging 3,577 PPM TREO at Its PCH Ionic Clay Project, Brazil https://bit.ly/48dXQTs
• February 7, 2024 – American Rare Earths Resource Estimate Increased by 64% https://bit.ly/3SuhAfU
• February 7, 2024 – Imperial Mining Announces Shareholder Approval of Name Change to Scandium Canada Ltd. and Results of its 2024 Annual and Special Meeting https://bit.ly/49nE1tY
• February 5, 2024 – Ucore Welcomes Canadian Government Officials to its Kingston Ontario CDF for an NRCan Funding Announcement https://bit.ly/495cTA3
• February 5, 2024 – Nano One Provides Shareholder Update with Key Objectives for 2024 https://bit.ly/49mNgut

Welcome to the latest Technology Metals Report (TMR), where we highlight the Top 10 news stories that members of the Critical Minerals Institute (CMI) have forwarded to us over the last 2 weeks.

In early 2024, the rare earths sector is witnessing significant strategic movements amidst a backdrop of declining prices and geopolitical tensions. Lynas Rare Earths Ltd. and MP Materials Corp., key players outside China, are rumored to be considering a mega-merger in response to falling rare earth prices and to mitigate the impact of Chinese trade restrictions. This potential consolidation aims to strengthen their production capabilities and align with the Australian and US governments’ efforts to reduce reliance on Chinese supplies, particularly for defense applications.

CMI’s Jack Lifton comments, “In the swirling rumors of a mega-merger between MP Materials and Lynas Rare Earths, it’s clear that the OEM industry’s disdain for single sourcing of critical materials is being overlooked. Litinski is eager to deploy his capital before it devalues, while Lacaze eyes a boost in share price ahead of her retirement. This scenario is akin to two veterans of the trade, unadorned and stark, facing the harsh daylight. Both MP and Lynas are in a precarious position, each with a singular customer and seemingly devoid of new strategies to navigate the market’s tumultuous waters.”

Concurrently, the industry is adjusting to market corrections, as highlighted by the Critical Minerals Institute’s observations on the electric vehicle (EV) materials market, indicating a shift towards efficiency and cost management. Meanwhile, initiatives like Controlled Thermal Resources Holdings Inc.’s funding quest for its lithium brine project and Appia Rare Earths & Uranium Corp.‘s (CSE: API | OTCQX: APAAF) exploration successes underscore the ongoing diversification and expansion within the critical minerals domain. These developments reflect a broader industry trend towards securing resilient supply chains for critical minerals amidst fluctuating market dynamics and geopolitical pressures.

Also breaking news today, Tesla Inc.: The EV maker is recalling 2.2 million vehicles, or nearly all of its electric vehicles in the United States, due to incorrect font size on warning lights, which increases the risk of a crash, the National Highway Traffic Safety Administration (NHTSA) said. This is more than the 2.03 million vehicles it recalled in the United States two months back, its biggest-ever such move at the time, to install new safeguards in its Autopilot advanced driver-assistance system. The latest recall includes vehicles across Tesla’s various models, including the Model S, Model X, 2017-2023 Model 3, Model Y, and 2024 Cybertruck vehicles, the NHTSA said. Separately, U.S. safety regulators said they have upgraded their probe into Tesla vehicles over power steering loss to an engineering analysis – a required step before they could potentially demand a recall.

Lynas linked to rare earths mega-merger as price falls bite (February 2, 2024, Source) —  Amid a sharp decline in rare earths prices and concerns over Chinese trade restrictions, there are speculations that Lynas Rare Earths Ltd. (ASX: LYC) may be considering a merger with its New York-listed rival, MP Materials Corp. (NYSE: MP). Industry insiders suggest that the two companies, both leading non-China producers of essential rare earth materials used in defense and various industries, could be in talks to create a mega-merger. The exact details of the deal are unclear, given the current slump in rare earth prices and Western concerns about China’s dominant position in the supply chain. However, a potential merger between Lynas, based in Western Australia and Malaysia, and MP, operating in California’s Mountain Pass, aligns with efforts by the Australian and US governments to strengthen collaboration between their resource companies for critical minerals extraction and processing, reducing dependency on China. Both Lynas and MP have suffered significant stock price declines, and a merger could help them bolster production capabilities and meet growing demands, particularly from the US Department of Defense, which aims to reduce reliance on Chinese supplies. Referral, CMI Co-Chairman Jack Lifton

Critical Minerals “rightsizing” in reaction to governments’ efforts to regulate market (February 1, 2024, Source) — The critical minerals industry is undergoing significant changes in the electric vehicle (EV) materials market. Jack Lifton, Co-Chairman of the Critical Minerals Institute (CMI), views recent price declines in key EV component materials as a natural market correction rather than a disaster, emphasizing minimal regulatory intervention. Declining profits for industry leaders, including China Northern Rare Earth, result from overestimated EV demand, economic factors, and falling sales, especially in California. Lifton advises investors to focus on efficient, low-cost producers, particularly in neodymium. The January 2024 CMI Report notes the U.S. government’s plan to ban Pentagon battery purchases from major Chinese companies and hints at potential recovery in lithium prices. Lynas Rare Earths’ revenue drop reflects market trends but also strategic capacity expansion. In summary, the industry faces short-term challenges but underscores the importance of efficiency, cost management, and adaptability for long-term success. Source, Investor.News

GM, Stellantis-Backed Lithium Startup Seeks More Than $1 Billion for Brine Project (February 1, 2024, Source) — Controlled Thermal Resources Holdings Inc., (CTR) a US lithium startup backed by Stellantis N.V. (NYSE: STLA) and General Motors (NYSE: GM), seeks over $1 billion in funding for its California lithium brine project. This initiative defies the industry’s 80% drop in lithium prices since late 2022. CTR’s unconventional approach focuses on geothermal brine deposits, seen as a potential future lithium supply source once technology challenges are overcome. This aligns with US government efforts to establish a domestic EV commodity supply chain. The funding plan includes equity and debt financing, with Goldman Sachs as the lead bank. Stellantis and GM have previously invested significantly in CTR to secure lithium for EV production. Referral, CMI Co-Chairman Jack Lifton

Attention set on rare earths in Canada and Brazil, Appia hits 2024 running (January 31, 2024, Source) —  Appia Rare Earths & Uranium Corp. (CSE: API | OTCQX: APAAF) is focusing on its rare earths projects in Canada and Brazil: the Alces Lake Project and the PCH Ionic Clay Project. The Alces Lake Project in Canada is recognized for its high-grade rare earths and gallium in monazite ore. Recent drill results have shown up to 1.57 wt.% Total Rare Earth Oxides (TREO) with mineralization extending to a depth of < 85 meters. In Brazil, the PCH Project offers a simplified extraction process for rare earths essential for electric motor magnets in most EVs. Hole RC-063 reported a total weighted average of 3.87% TREO. Appia’s expansion of mining claims and plans for a Maiden Resource in Q1, 2024, signal their commitment to these projects, with a market cap of C$27 million suggesting a potentially significant year ahead in 2024. Source, Investor.News

China EVs: lithium producers Ganfeng, Tianqi issue profit warnings, blame price plunge for battery material as stocks sink (January 31, 2024, Source) —  Chinese lithium producers Ganfeng Lithium and Tianqi Lithium have issued profit warnings, attributing their declining profits to a significant drop in lithium prices. Ganfeng expects its 2023 net profit to plummet by 70-80% to between 4.2 billion yuan and 6.2 billion yuan. After accounting for non-recurring items, net profit will range from 2.3 billion yuan to 3.4 billion yuan, down 83-88.5% from 2022 levels. Tianqi anticipates a net profit decline of 62.9-72.6% to 6.62 billion yuan – 8.95 billion yuan. Both companies attribute their struggles to the cyclical nature of the lithium industry and declining lithium prices. The average price of China-produced lithium hydroxide exported to South Korea fell by 45% last month. While electric vehicle sales are still growing, the rate has slowed, impacting lithium demand. However, global lithium demand is expected to rise by 27% this year, with a surplus expected before a deficit in 2026. Referral, CMI Co-Chairman Jack Lifton

Mining analyst-turned-Vital Metals CEO eyes much larger Nechalacho reboot (January 29, 2024, Source) —  Geordie Mark, CEO of Vital Metals Limited (ASX: VML), aims to revamp the Nechalacho rare earths project in the Northwest Territories, leveraging 15 years of experience as a mining analyst. Recognizing the growing demand for rare earth elements in the technology and electric vehicle (EV) markets, Mark plans to shift Vital’s strategy towards a bulk tonnage operation targeting lighter rare earths like praseodymium and neodymium. This comes after the failure of the company’s processing division and a Chinese investment lifeline in 2023. A comprehensive scoping study is crucial for long-term viability, and Mark expects demand for praseodymium and neodymium to rise significantly in the next decade, particularly in China and Europe. Shenghe Resources’ investment provides vital capital for Nechalacho’s development, positioning it to compete with North America’s only rare earths mine, MP Materials Corp.’s (NYSE: MP) Mountain Pass operation. Referral, CMI Co-Chairman Jack Lifton

The Critical Minerals Institute Report (01.25.2024): U.S. government bans Pentagon battery purchases from major Chinese companies starting October 2027 (January 25, 2024, Source) —  The January 2024 Critical Minerals Institute (CMI) report highlighted key economic and geopolitical developments. U.S. inflation in December 2023 impacted interest rate reduction plans, while the S&P 500 rose by 2.04% year-to-date. China’s economy slowed, with falling home prices, and global tensions persisted. In the global electric vehicle (EV) market, December 2023 set a record for plugin electric car sales, led by China. However, the EV sector’s growth rate slowed compared to previous years. The U.S. reported a surge in EV sales and enacted Zero Emission Vehicle mandates to boost adoption. In the EV battery sector, the U.S. government announced a ban on Pentagon battery purchases from major Chinese companies, starting October 2027. Challenges in the critical minerals sector included depressed prices due to oversupply and slowing EV market growth. Recovery in lithium prices was anticipated in late Q1 or early Q2 2024. The report emphasized a negative supply response from producers and expected a potential recovery in the second half of 2024, assuming reasonable EV sales growth. Source, Investor.News

Tesla Projects Slower Growth in 2024 as EV Demand Softens (January 24, 2024, Source) — Tesla Inc. (NASDAQ: TSLA) anticipates slower growth in 2024 amid a challenging landscape for the electric vehicle (EV) industry. CEO Elon Musk desires greater control, aiming for a 25% ownership stake to deter activist shareholders. This follows Musk’s ultimatum to shift focus to AI and robotics if control isn’t achieved. Tesla faces declining demand, shrinking profit margins, heightened competition, and recent price cuts. Despite doubling fourth-quarter net income to $7.9 billion, costs for projects like the Cybertruck and AI research impact profitability. Tesla’s valuation, historically tied to sales and Musk’s vision, faces uncertainty. Challenges include Hertz selling EVs and Chinese automakers overtaking Tesla. EV enthusiasm wanes due to pricing, charging concerns, and range limitations. Tesla plans cost reduction for future vehicles but encounters short-term cost pressures. Despite this, strong Cybertruck demand is expected, with production scaling up gradually. Referral, CMI Director, Alastair Neill

Rare-earths miner Lynas’ Q2 revenue halves on falling prices, lower China demand (January 24, 2024, Source) —  Australia’s Lynas Rare Earths reported a significant drop in its second-quarter revenue, falling by 51.7% to A$112.5 million due to plummeting rare earth prices and reduced demand in China, particularly in the appliance sector amid a construction slowdown. This decline in revenue, which missed analysts’ forecasts, led to a 30-month low in its share prices. Despite this downturn, Lynas has continued to expand its operations, including the near-completion of its Kalgoorlie processing plant in Australia, upgrades to its Malaysian facilities, and ongoing work at the Mt Weld mine. The company, a major supplier outside China, has also been working on a new facility in Texas to serve the U.S. Department of Defense. Despite these efforts, Lynas’ challenges are compounded by the lower average selling price of its products, which has more than halved compared to last year. Referral, CMI Director, Russell Fryer

Investors turn to copper, gold and uranium amid battery metals rout (January 24, 2024, Source) — In 2024, investors are shifting their focus away from battery metals, such as nickel and lithium, due to significant price declines. Instead, they are turning to commodities like copper, gold, and uranium. Copper prices have rebounded following supply shortages and disruptions in production by key global producers. Gold is experiencing renewed interest, driven by geopolitical crises and a weakening US dollar, with forecasts predicting it to trade above $2,000 per ounce in the coming year. Uranium has gained substantial momentum, reaching decade-high prices, driven by limited supply and increased demand for nuclear energy in Western countries. Investors are diversifying their portfolios, seeking better prospects in these alternative commodities. Referral, CMI Director, Russell Fryer

China, in comic strip, warns of ‘overseas’ threats to its rare earths (January 22, 2024, Source) —  China’s State Security Ministry released a comic strip on social media, depicting foreign threats to its rare earth resources. The narrative shows security officers uncovering covert operations by foreign-looking characters, suggesting overseas interest in China’s strategic minerals. China, the leading producer of rare earths essential for high-tech industries, has imposed export restrictions on these elements and related technologies, citing national security. The move has heightened tensions, particularly with the United States, amidst accusations of economic coercion. The comic underscores the importance of safeguarding these resources against international competition and espionage. The state-controlled Global Times highlighted the story, reflecting on the global race for rare earths, vital in military, consumer electronics, and renewable energy sectors, as a national security issue. Referral, CMI Director, Alastair Neill

Tanzanian, Canadian firms to search for rare metal (January 22, 2024, Source) — Tanzanian firm Memnon Project Management Services Company Limited and Canadian company Anibesa Energy Metals Corp. are set to collaborate in prospecting for niobium in Mbozi District, Songwe Region, with an anticipated investment of up to $50 million. They have obtained regulatory approvals and are finalizing the acquisition of three licenses for niobium minerals, while three more geologists are expected to join the exploration team. Memnon Project Management Services is involved in various projects, including the Kongwa Lithium Project and solar energy initiatives. Niobium, a rare metal, enhances the strength of alloys and is used in various industries, including aerospace and construction. As of 2022, Brazil held the largest niobium reserves globally. The partnership aligns with Tanzania’s goal of attracting international companies to boost the mining industry by focusing on valuable critical metals projects. Referral, CMI Director, Alastair Neill

Investor.News Critical Minerals Media Coverage:

• February 01, 2024 – Critical Minerals “rightsizing” in reaction to governments’ efforts to regulate market https://bit.ly/49f78zC
• January 31, 2024 – Attention set on rare earths in Canada and Brazil, Appia hits 2024 running https://bit.ly/3ueaxjg
• January 25, 2024 – The Critical Minerals Institute Report (01.25.2024): U.S. government bans Pentagon battery purchases from major Chinese companies starting October 2027 https://bit.ly/4961zU0
• January 22, 2024 – Unveiling Insights from Ecclestone on the Future of Mining and Investment from Riyadh’s Future Minerals Forum Event https://bit.ly/491pVOS

Critical Minerals IN8.Pro Member News Releases:

• February 2, 2024 – Appia Announces Plans for Drilling at the Loranger Uranium-Bearing Property, Saskatchewan, Canada https://bit.ly/3UphbOs
• February 1, 2024 – Obonga: Wishbone Exploration Permit Application https://bit.ly/3UlnFOj
• February 1, 2024 – First Phosphate to Provide Project Update to the Federation of Chambers of Commerce of the Saguenay-Lac-Saint-Jean Region of Quebec, Canada https://bit.ly/42ugvt1
• January 31, 2024 – Defense Metals Announces Closing of its $738,836 Non-Brokered Private Placement https://bit.ly/3umNv9S
• January 31, 2024 – First Phosphate Announces Launch of 25,000 m Drill Campaign at its Bégin-Lamarche Project https://bit.ly/3SmPtPD
• January 30, 2024 – Ucore Announces Closing of Debenture Offering https://bit.ly/3SHT1xa
• January 30, 2024 – Western Uranium & Vanadium Bolsters Mining Team to Scale-Up Uranium Production https://bit.ly/47UTIHZ
• January 30, 2024 – F3 Hits 2.05m Off Scale >65,535 CPS in First Hole of Winter Program at JR Zone https://bit.ly/3SCxru9
• January 29, 2024 – First Phosphate Confirms Two Additional New High-Grade Discoveries at Begin-Lamarche Property and up to 39.45% P2O5 at Larouche https://bit.ly/3OlGWew
• January 29, 2024 – American Rare Earths Quarterly Activities Report for the Period Ending 31 December 2023 https://bit.ly/3SBQQeM
• January 29, 2024 – Australian Strategic Materials Quarterly Activities Report to 31 December 2023 https://bit.ly/3UdGXVK
• January 26, 2024 – Appia Rare Earths & Uranium Corp. Announces New Cooperation Agreement with the Ya’thi Néné Lands and Resources Office https://bit.ly/3Oke4TU
• January 25, 2024 – First Phosphate, American Battery Factory and Integrals Power Sign MOU to Produce LFP Cathode Active Material and Battery Cells in North America https://bit.ly/48MnCiU
• January 23, 2024 – F3 Announces Commencement of Drilling at PLN https://bit.ly/3Uc6COo
• January 23, 2024 – Power Nickel Announces Filing of Amended Technical Report https://bit.ly/3HvYPUd
• January 23, 2024 – First Phosphate Corp. Welcomes the Addition of Apatite (Phosphate) to the Critical and Strategic Minerals List of Quebec, Canada https://bit.ly/48Pv7Wf
• January 22, 2024 – First Phosphate Announces Closing of the Third and Final Tranche of Oversubscribed Private Placement Financing for Total Gross Proceeds of $8.2 Million https://bit.ly/3U5Vl2l
• January 22, 2024 – Elcora Develops Innovative Process To Extract Vanadium From Its Moroccan Vanadinite Deposit https://bit.ly/3Hu8Zon
• January 22, 2024 – American Rare Earths Announces Breakthrough Metallurgical Results https://bit.ly/3O96trp
• January 22, 2024 – F3 Expands PLN Project with Acquisition of PW Property from CanAlaska https://bit.ly/3vKBMTb

Today we take a look at the magnetic rare earths sector and two leading rare earth companies and what we can expect in 2024 and beyond.

The magnet rare earths prices have fallen in 2022 and 2023

The magnet rare earths sector was hit hard in 2023 with China’s Neodymium (Nd), Praseodymium (Pr), and Dysprosium (Dy) prices falling as the global economy and EV demand slowed.

Neodymium prices came crashing down in 2022 and 2023 as demand slowed after the 2021 growth rate boom in EV sales – Now at CNY 530,000/t

Source: Trading Economics

Global plugin electric car sales grew by 108% in 2021 causing a huge spike in EV metal prices. Then in 2022, the growth rate slowed to 56% at a time when supply of most EV metals surged. Finally in 2023, the growth rate slowed further to an estimated 28%, resulting in further price decline for the magnet metals such as neodymium.

Demand for the magnet rare earths in electric motors is driven by multiple sources with electric vehicle sales being a key driver. (90% of EV motors use rare earth magnets)

Source: MP Materials company presentation

Will the magnet rare earths prices rise in 2024?

The answer to this question will largely depend on recovery in China and the global economy driving increased demand for EVs, wind turbines, and other magnets used in various industrial applications. Given the most recent trend globally has been towards future interest rate decreases (notably in the USA and China), it bodes well for a recovering consumer and hence demand. This may take a good part of 2024 to flow through with excess inventories across many sectors still needing to be worked off. If we get a strong pickup in EV demand (>40% YoY increase) in 2024, then the magnet rare earths sector woes could soon disappear.

China’s December 2023 EV sales give some hope as they jumped to a record 945,000 units, achieving a superb 47% YoY growth rate.

Lynas Rare Earths Ltd. (ASX: LYC) (“Lynas”) update

The big recent Lynas news (announced December 7, 2023) is that the first feed of material from the Mt Weld Mine has been introduced into the new Kalgoorlie Rare Earths Processing Facility in Western Australia, leading to first production and ramp-up of the Facility. A great achievement for Lynas, especially given that the Kalgoorlie Rare Earths Processing Facility is Australia’s first value-added rare earths processing facility. Lynas stated:

The Lynas Malaysia plant is currently shutdown as works to increase downstream processing capacity are completed. Production will recommence in January 2024. Mixed Rare Earth Carbonate (MREC) from the Kalgoorlie Rare Earth Processing Facility will be progressively introduced to the Lynas Malaysia plant commencing late in the March quarter and increasing as the controlled ramp up of the Kalgoorlie facility is progressed.…“

Once their expansions are completed, Lynas intend to increase their production capacity to 10,500tpa NdPr (Neodymium-Praseodymium). Lynas produced 6,142t of NdPr in FY 2023.

2024 will see the Mt Weld Mine expansion and further work on Lynas’ US Rare Earths Processing Facility Project targeted to be operational by July 2025 – June 2026.

Lynas is expanding its rare earths mining and processing capabilities through to 2025/26

Source: Lynas company presentation

MP Materials Corp. (NYSE: MP) (“MP Materials”) update

MP Materials owns and operates the Mountain Pass Rare Earth Mine and Processing Facility in California, USA. In the past MP Materials had to ship their concentrate to China for processing; however, they have a target to bring this back to the USA.

Their target is to grow their mine output by 50% over the next four years and to build separation capacity in the USA with annual production of 6,000 tpa NdPr oxide. The third stage of their plan is to build a greenfield production facility in Texas targeting ~1,000tpa of finished NdFeB (Neodymium Iron Boron) magnets. They already have General Motors (NYSE: GM) as a foundational customer.

MP Materials is working towards Stage II and Stage III of their plan to bring rare earths processing and magnets production to the USA

Source: MP Materials company presentation

Closing remarks

2024 should see a year of consolidation for the rare earths sector as some experts are telling me. Some forecasts are for NdPr supply deficit to begin as early as 2024; however, this will largely depend on China demand, the global economy, EV sales, and new NdPr supply hitting the market.

The two Western magnet rare earths leaders Lynas and MP Materials (and some other key players) are progressing their plans to further build a western supply chain and should be largely complete within the next 2-4 years if it goes to plan. This all supports the building of an end-to-end Western rare earths and magnets sector this decade. Stay tuned.

Lynas Rare Earths Ltd. (ASX: LYC), the Australian mining giant, recently breathed a sigh of relief. Malaysia’s government granted the firm a pivotal extension on their operating license, allowing them to continue importing and processing raw materials laden with naturally occurring radioactive elements until March 2026.

Previously, Malaysia had stringent reservations due to radiation concerns stemming from the cracking and leaching procedures in processing these materials. The facility in Pahang, Malaysia, has been mired in controversies surrounding radioactive waste, specifically thorium, since 2012. Malaysia had gone to the extent of instructing Lynas to shift certain radioactive waste-producing operations out of the country, even enforcing a ban on imports of raw materials with these elements.

The game-changer was Lynas’s innovative proposal: a technology that could extract thorium not just from the raw materials but also from the accumulated waste. If Lynas can effectively commercialize this method, the waste can be rapidly disposed of, while the extracted thorium might find buyers in nuclear plants worldwide.

But why is this decision so monumental for Lynas?

For starters, had Lynas not been granted this extension, the company would be staring at a gaping hole in their supply chain. Their Kalgoorlie plant in Australia would not start processing any carbonate product until the next year, and ramping up to their nameplate capacity would take potentially another nine months. This scenario would have crippled their Malaysian production for nearly three-quarters of the year, slashing their annual output by half.

Historically, Lynas imported its monazite concentrate from Mount Weld in Australia. This concentrate would then journey to Malaysia, undergoing a sulfation bake. In simpler terms, it would be combined with sulfuric acid, processed in a kiln, and subsequently undergo a water leach and purification process. But one of the waste streams from this method, which contained higher radiation levels, proved problematic.

Lynas’s ambitious plans include expanding its Magnetic Materials (Neodymium and Praseodymium) production in Malaysia, a crucial component in various modern applications ranging from magnets in wind turbines to motors in electric vehicles. With expansion plans in the pipeline and a new facility in Texas, the extended operating license in Malaysia ensures that Lynas has a consistent supply to meet global demands.

The strategic decision by the Malaysian government underscores the importance of Lynas in the global rare earth industry. With news of other major players facing operational hiccups, the industry needed a win. And this decision, undoubtedly, is a significant one. It not only secures Lynas’s position but also sends a positive signal for the rare earth industry at large.

In essence, this development underscores a harmonizing synergy of economic ambitions and environmental prudence. While the decision spells robust business prospects for Lynas, it’s also a nod to Malaysia’s commitment to environmental sustainability. The future, it seems, is both green and bright for Lynas and rare earths.

The world of rare earth permanent magnet manufacturing just received a jolt of excitement. A new announcement from the Department of Defense has revealed a significant investment in a domestic manufacturing plant, a move that holds implications not just for defense, but also for the wider commercial sphere.

For context, it’s worth noting that for years, the German company Vacuumschmelze (VAC) had a sales office in Kentucky via a company named E-VAC Magnetics, LLC (E-VAC). Primarily a marketing office, E-VAC was linked with home building projects but was also known for marketing VAC’s magnet products. And now, in a surprising twist, the Department of Defense has invested a whopping $94.1 million in E-VAC to bring to life a rare earth permanent magnet manufacturing plant right here in the U.S.

But there’s more to this story.

It’s customary for the Department of Defense’s grants to predominantly target American-owned and operated businesses. Enter Lynas Rare Earths Ltd. (ASX: LYC), an Australian company currently producing rare earths, which applied for a grant to build a heavy rare earths’ separation plant along with American company Blue Line Chemicals, a processor of rare earth products, in Texas. The dynamics of this partnership and grant allocation remain somewhat enigmatic. The essential detail here is that a non-manufacturing entity like E-VAC has secured this grant, and behind the curtain orchestrating the moves is VAC, a reputable manufacturer of these rare earth permanent magnets vital for automotive EVs.

A telling point is the recent order from General Motors (NYSE: GM) to VAC: a requirement for 1000 tons of magnets per year to be delivered beginning mid-2025. This order aligns intriguingly with the announcement that the new E-VAC manufacturing facility, bankrolled by the Department of Defense, is set to be operational by 2025. Given that the factory’s projected capacity is 1500 tons annually, it’s compelling to infer that General Motors might source its order from this very plant.

Still, there’s a broader implication to this move.

Defense doesn’t invest in consumer markets. Its core mandate is national security. The F-35 fighter jet, for instance, is believed to use substantial quantities of rare earth permanent magnets. This means the primary output from the E-VAC facility might be earmarked for defense purposes, with consumer needs taking second place. The scenario painted here is a deliberate strategy by the Department of Defense to ensure a domestic supply chain that meets both defense and commercial requirements.

However, a pressing question arises: where will the raw materials for these magnets come from? As of now, no U.S. entity manufactures these in quantities that a 1500-ton factory would demand. The primary Western supplier today is LCM of England, but its output is a mere fraction of this requirement.

This move by the Department of Defense is historic. It represents the first significant announcement of a large scale commercial rare earth permanent magnet factory in North America, since Magnequench was sold and moved to China nearly 25 years ago. But as this initiative takes shape, stakeholders will be keenly watching to determine the origins of the raw materials and the supply chain dynamics that this factory will engender.

Overview of Lynas’ Financial Achievements

Lynas Rare Earths Ltd. (ASX: LYC) recently unveiled its financial statistics for the fiscal period culminating on 30 June 2023. The firm’s financial year was marked by significant operational feats, most notably setting new benchmarks in concentrate and NdPr production during the latter half.

• The revenue stood impressively at AUS$739.3 million with EBITDA and NPAT making up 51% and 42% of this total, respectively.
• CEO Amanda Lacaze, while applauding the company’s recent achievements, pointed out that the past fiscal year, though robust, did not eclipse the monumental market highs of FY22.
• Highlighting the company’s commitment to growth and future projects, Lynas dedicated $595 million to capital endeavors, concluding the year with a formidable cash reserve of AUS$1,011.2 million.

Projects at a Glance

1. Kalgoorlie Rare Earths Processing Facility: Having witnessed extensive construction throughout the year, only the waste gas treatment segment remains pending. Unexpected expenses have nudged the project’s budget to an estimated $730 million.
2. Mt Weld Development: Launched in March 2023, this project continues to advance seamlessly, remaining firmly on its timeline.
3. Lynas’ Venture into the U.S.: Strengthening its global presence, Lynas clinched a collaboration with the U.S. Department of Defense, focused on erecting the Heavy Rare Earths component of their Texas-based processing facility. Financial commitment from the U.S. Government is pegged around US$258 million.

Symbiotic Government Collaborations

Lynas has strategically forged partnerships worldwide to bolster the rare earths supply chain:

• A nod from the Australian Government came with an award of AUS$20 million in June 2023.
• March saw the Japanese Government infuse AUS$200 million via Japan Australia Rare Earths B.V. (JARE).
• A significant contract from the U.S. Government worth US$258 million was finalized in August 2023.
• In Malaysia, while Lynas procured a license renewal valid for three years starting February 2023, it came with stipulations, leading Lynas to take the judicial route.

Expert Perspective: Jack Lifton’s Observations

Renowned analyst Jack Lifton cast a discerning eye over the report, highlighting a few areas of concern:

• Lifton expressed reservations about the company’s projected costs, particularly emphasizing the unexpected doubling in the estimate for the Lynas U.S. venture as quoted by the Department of Defense.
• Lifton’s scrutiny extended to the credibility of Lynas’ costing, especially when it came to American projects.
• The Kalgoorlie initiative drew attention too, with its budget swelling by 50%, a figure Lifton deemed notably high.
• On the Malaysian front, Lifton underscored Lynas’ challenge – the prohibition against processing radioactive material. With the Kalgoorlie initiative aimed at purifying the ore of thorium and uranium before its Malaysian journey, Lifton probed the readiness of the project, questioning its ability to meet the January 2024 deadline for shipments.

While Lynas Rare Earths Ltd. certainly celebrates a year of notable achievements, the meticulous observations and questions raised by experts such as Lifton emphasize the importance of thorough scrutiny, foresight, and transparent communication in ensuring sustained growth and stakeholder trust.