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

“Neo Performance Materials’ organization today is the closest that North America has yet come to a totally vertically integrated rare earth permanent magnet supplier. Now, the company has acquired and is moving to bring a significant rare earth deposit in Greenland into production. When that occurs, it will be the first company outside of China, ever, to be a totally vertically integrated manufacturer of rare earth permanent magnets. We should all be watching Neo Performance as if our (self-sufficient and secure) independent economic lives depend on it.” — Jack Lifton, Co-Chairman, Critical Minerals Institute

Neo Performance Materials Inc. (TSX: NEO) (“Neo”) produces specialty materials that incorporate specialty materials that are mostly rare earth based, but also include other technology metals, such as gallium and cobalt, all of which are necessary in its feature product, bonded rare earth permanent magnets. Neo is the only company in the world that operates dual supply chains inside and outside of China for rare earth elements (REE) separation and REE advanced materials. Neo owns the only operating commercial rare earth separation facility in Europe, located in Estonia. Neo operates globally with sales and production across 10 countries.

Neo’s advanced materials are essential components of many of the world’s fastest growing cleantech applications

Source: Neo company presentation

Neo’s growth plans and acquisitions

Neo continues to grow and expand its business and now has several projects in the pipeline.

These include the following:

1. Growth of Neo’s existing operations – Magnequench (a global leader in bonded neodymium-iron-boron (NdFeB) magnetic powders and magnets), Chemicals and Oxides, and Rare Metals (gallium, indium, rhenium, tantalum, niobium, and hafnium).
2. An EU Magnet Manufacturing Plant with ground breaking in June 2023 and planned production of sintered rare earth magnets in Estonia to begin in 2025.
3. Controlling interest (90%) in newly acquired SG Technologies Group Limited (“SGTec“), one of Europe’s leading advanced, specialty manufacturers of rare-earth-based and other high-performance magnets.
4. Various rare earths supply chain projects and agreements – Sarfartoq Project exploration license in Greenland, Yangibana Project in Australia (the owner Hastings Technology Metals Limited (ASX: HAS) is Neo’s largest shareholder so a supply arrangement looks highly probable, Koppamurra Project in Australia non-binding MOU for off-take of potentially 50% of the planned production of mixed rare earth carbonate, supply agreement with Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) (from USA) of mixed REE carbonate.

Q1 2023 Financials weaker due to weaker pricing dynamics

Some investors may have been disappointed that Neo’s Q1, 2023 financials were weaker than a year earlier. Consolidated revenue was US$135.5 million in Q1, 2023, compared to US$166.3 million for the same period in the prior year.

However, it needs to be factored in that the key magnet rare earths prices have fallen heavily over the past year (neodymium is down 50.21%).

Looking on the positive side Neo still has a very healthy balance sheet with cash and cash equivalents of US$145.7 million (as of March 31, 2023) and Neo generated positive net cash of US$12.2 million in Q1, 2023.

The fall in neodymium prices in the past year is fairly similar to the lithium price fall. Both had a huge run-up, then slower China EV sales in early 2023 sent prices crashing as manufacturers chose to wind down inventory and delay purchases until prices were back at low levels. All of this bodes well for some stabilization of prices now and potential to move higher from here if demand accelerated in H2, 2023.

Investors can listen to the Neo Q1, 2023 earnings call here. Neo’s President & CEO Constantine Karayannopoulos discusses the causes for lower magnet rare earths demand (China property slowdown, higher interest rates impacting negatively on wind farms, China EV sales slowdown) and the impact of lower rare earths pricing and the Company’s growth plans. He says “I believe we are nearing the end of that restabilisation” in rare earth prices. Meaning the rare earth price falls are near the end.

Neodymium 10 year price chart

Source: Trading Economics

Closing remarks

Neo has just weathered a challenging past few quarters caused mostly by rare earths price declines as China EV sales slowed and manufacturers reduced inventory. Despite this Neo finished Q1, 2023 in a very strong cash position and continues to make progress on their growth plans.

As the macro picture hopefully starts to improve in H2 2023, especially for China EV sales, Neo should once again be a winner of the macro trend of increased global use of the magnet rare earth products and the specialty rare metals, that are all needed to drive the cleantech revolution.

Neo Performance Materials trades on a market cap of C$377 million.

Lynas Rare Earths Limited (ASX: LYC) (“Lynas”) recently announced some positive news that the Malaysian authorities have advised that their license to import and process lanthanide concentrate is now valid until 1 January 2024, effectively a 6-month extension to get their Malaysian rare earths unit in line with environmental requirements.

Meanwhile, Lynas continues to oppose the Malaysian government’s ‘new’ rules and is working on alternate facilities in Western Australia. Should the Malaysian situation not be resolved then Lynas has a backup plan. The announcement stated:

“The licence variation allows the Lynas Malaysia cracking and leaching plant to continue to operate until 1 January 2024 and will remove the requirement for a shutdown at the Lynas Malaysia plant prior to 1 January 2024.”

At the heart of the issue is that the Malaysian authorities say the cracking and leaching plant generates radioactive waste. Lynas argues that they are meeting the conditions as per their original agreement with the Malaysian government. Lynas stated:

“Lynas had applied to the MOSTI Minister for the removal of the conditions which limit operations at the Lynas Malaysia facility as they represent a significant variation from the conditions under which Lynas made the initial decision to invest in Malaysia.“

We will have to wait until January 1, 2024, to see what happens next regarding Lynas operating its cracking and leaching plant in Malaysia.

Lynas’ Kalgoorlie Rare Earths Processing Facility is in the final stages of construction, feed to start this quarter (Q4/FY23 – Ending June 30)

Lynas has been rapidly building a backup rare earths processing facility in Kalgoorlie, Western Australia. Lynas stated that the facility “has now entered the final phase of major construction activities, dry commissioning activities have commenced in certain parts of the plant, target feed on date for the Facility in Q4 FY23.”

Lynas plans to use rare earths carbonate feed from their Mt Weld Mine to feed the new Kalgoorlie rare earths processing facility once complete (noting a ramp-up period applies). The product would then be shipped to Malaysia for final processing.

FIGURE 1: Lynas’ under construction rare earths processing facility in Kalgoorlie Western Australia

Lynas achieved record NdPr production in Q3/FY23 (Ending March 31)

In Q3/FY23 Lynas produced 4,348 tonnes of total rare earths oxide and a record 1,725 tonnes of Neodymium-Praseodymium (“NdPr”). This resulted in A$237.1 million of revenue for the quarter. The chart below shows Lynas’ revenue trending slightly higher over the past 2 years on the back of solid production and prices.

FIGURE 2: Lynas’ last 2 years Total Rare Earth Oxides (“TREO”) production volumes and sales revenues

USA LRE and HRE facilities update

The USA Light Rare Earth (“LRE”) and Heavy Rare Earth (“HRE”) facilities plan to be able to process both light and heavy rare earths.

Lynas has secured a greenfield site in an existing industrial zone in Texas, further progressed the detailed engineering design, and engaged a preferred U.S. Engineering, Procurement, Construction, and Management (“EPCM’) contractor.

Tesla plans to use non-rare earths motors in their next generation vehicle

Lynas CEO, Amanda Lacaze, stated in the Q3, FY 2023 earnings call:

“The neodymium iron boron [NbFe] magnet technology is the most energy efficient, because it is the lightest motor, and over the life time of the vehicle it gives you the best efficiency… …and it has the lowest CO2 emissions… …more are choosing NbFe technology than the alternative… …today we find that demand still is ahead of our ability to service everyone who would like to buy Lynas NdPr… …the current (price) softness is very much about internal China dynamics… …but we at Lynas remain very confident of the long term trend and we know that the Chinese rare earth firms share that confidence. We remain committed to growing to meet the market and that’s one of the reasons why our ambitious capital investment plan continues.”

Closing remarks

Lynas is very well positioned in 2023 with A$1.12 billion in cash (as of March 31, 2023) and is on target with its expansion plans.

The 6-month Malaysian extension also means that Lynas’ rare earths production can continue uninterrupted, at least until January 1, 2024. At that point, the Kalgoorlie facility should hopefully be operating smoothly and ramping up production and offer an alternative should the Malaysia cracking and leaching plant need to be shut down on January 1, 2024.

Lynas Rare Earths trades at a market cap of A$6.82 billion and a PE ratio (TTM) of 12.39.

The rare earths sector has had plenty of good news in 2022 including the recently announced proposal by the European Commission (“EC”) for a European Raw Materials Act. A very telling comment in the announcement gives a big clue as to which critical materials hold the greatest concern. The EC stated: “Lithium and rare earths will soon be more important than oil and gas……Our demand for rare earths alone will increase fivefold by 2030.” The supply risk for key rare earths is a problem for all western countries. China dominates the rare earths supply chain (58% of mines, 85% of processing) and the production of powerful rare earth magnets used in EVs, wind turbines, and most military hardware that employ powerful magnets. The U.S has already started various initiatives to support the rare earths supply chain, including some funding from the Infrastructure Act. Last month the Biden administration announced $2.8 billion of grants for various critical materials and battery supply chain related projects in the USA.

So clearly the funds are now flowing and the race is on to develop both an EU and a U.S critical materials and battery supply chain. Given the rising global geopolitical tensions Europe and USA will now need to support the critical materials sector like never before – both funding and permitting.

Source: American Rare Earths company presentation

Today’s company is working as fast as they can to help create a U.S source of critical rare earths from their three USA rare earths projects.

American Rare Earths Limited (ASX: ARR | OTCQB: ARRNF) is focused on developing their 100% owned La Paz Scandium and Rare Earths Project in Arizona, USA. The Company’s other two projects are the Halleck Creek Project in Wyoming and the Searchlight Rare Earths Project in Nevada, USA.

American Rare Earths’ 3 USA rare earths projects currently being explored and developed

Source: American Rare Earths company presentation

La Paz Project update

The La Paz Project has high-value magnet rare earths (NdPr) as well as scandium with a 2021 JORC Resource of 170.6 million tonnes at an average grade of 469ppm Total Rare Earth Oxide (“TREO”) (contained ~80 million kgs TREO, plus 4.4 million kgs of Scandium Oxide (Sc2O3)). American Rare Earths Limited has recently completed the metallurgical test work at La Paz. The results were successful using the Watts & Fisher’s proprietary technology for the extraction of rare earth metals. According to the Company: “The technology shows good promise with further development, moving into piloting down the track. Rapid dissolution of rare earth values within 2 to 3 minutes at leaching temperatures above 225°C.” Next steps at La Paz include South-West Area resource expansion and then a PEA.

The Halleck Creek Project update

At the Halleck Creek Project, the Company continues their drilling campaign to define a significant JORC Resource. The Company stated recently: “The drilling commenced early October and is progressing well. It is anticipated the campaign, analysis and subsequent announcements relating to a maiden JORC resource will be completed in the first quarter of calendar year 2023.” In good news for shareholders, the Halleck Creek exploration target has been increased by 328%, boosted by the newly staked claim area Bluegrass which indicates consistent rare earth mineralisation. Beyond that, the next steps include metallurgy testing.

American Rare Earths has also recently stated they are evaluating even more potential rare earth opportunities in North America. Finally, in more good news the Company’s wholly-owned US subsidiary, Western Rare Earths (WRE), and a consortium of companies (Phinix, LLC and Virginia) were awarded US$500,000 in R&D funding. The consortium will use the funding to develop extraction and separation focused processing technology studies on rare earths ore. The project goal is to produce light, medium, and heavy rare earth oxide products of greater than 95% purity.

American Rare Earths Limited trades on a market cap of A$91 million. Exciting times ahead for this fast-moving company — they are a member of the Critical Minerals Institute.

In this video, Critical Minerals Institute’s (CMI) Executive Chairman Jack Lifton talks about the upcoming Critical Minerals Summit (CMS 2022) on Wednesday, November 9, 2022, at the historic National Club in Toronto, Canada from 9 AM to 4 PM EST.

Jack says that his opening remarks at the summit will try to address the problem of scalability of critical minerals in the EV supply chain. He adds that the problem is “severe but is the most ignored problem in critical minerals.” With the demand for lithium per person grown by “5000 times between 2007 to 2022”, Jack explains how we are moving towards “a world of the haves and the have-nots” when it comes to having access to non-fossil fuel energy.

To access the full episode, click here

Note from Publisher: Next week – on Wednesday, November 9th in Toronto, the inaugural Critical Minerals Summit is on! To secure a delegates pass, click here  — READ: Summit to Address the Impact of the $1.2 Trillion EV Market Demand by 2030 on the Critical Minerals Sector

Don’t miss other InvestorIntel videos. Subscribe to the InvestorIntel YouTube channel by clicking here.

About The Critical Minerals Institute

The Critical Mineral Institute (CMI) is an international organization for companies and professionals focused on battery materials, technology metals, defense metals, ESG technologies and practices, the general EV market, and the use of critical minerals for energy and alternative energy production. Offering an online site that features job opportunities that range from consulting roles to Advisory Board positions, the CMI offers a wide range of B2B service solutions. Also offering online and in-person events, the CMI is designed for education, collaboration, and to provide professional opportunities to meet the critical minerals supply chain challenges.

Everybody is claiming to have “Critical Metals/Minerals” these days. Desperados in the copper space are the most shameless at touting this claim, while the most ludicrous are those in the gold space (though that goes without saying).

But how to measure what is and what isn’t critical?

Rankings

Criticality and Chinese dominance have become popular themes over the last decade with the British Geological Survey’s (BGS) first Criticality ranking in 2011 (in the midst of the Rare Earth boom) firing the starting gun on a race between countries to define what is critical to their own circumstances.

All attempts at ranking criticality are bound to run into criticism with different pundits and different economies perceiving different needs. Moreover, circumstances change, as Cesium showed when it went from being dominated by the US to being dominated by China when the US, fecklessly, let Sinomines acquire Cabot’s specialty fluids division. In our perception, Tungsten is not as critical as it was due to numerous non-Chinese developments in the pipeline.

Of all the Criticality lists the BGS one was the only one giving scoring to the metals and then producing degrees of risk to supply. Moreover, it gives the impression of being focused upon which metals are at risk (largely from China-dominance, though unstated) rather than saying (as the JOGMEC list does) that certain metals are critical for a specific (i.e. Japan’s) economy.

Criticality as Semantics

Metals rankings have now become like radio stations’ Top 40 lists of days gone by. However, it may just be a matter of international semantics as to what the word “critical” actually implies.

Some are saying that this means a metal is vital to an economy (which of course iron ore is to every economy) but others are interpreting it as being that the supply is in some way threatened or vulnerable. And the latter is where the China Factor is invoked. Europe meanwhile wants to fence-sit and pretends that it is not accusing the Chinese of wielding a big stick threatening EU industries (when really the Chinese are being threatening indeed).

The BGS by using the word “Risk” did not mince its words. Everyone knew what it meant. Chinese dominance meant supply could be turned off.

Rising Tide of Concern?

The financial media chattering about Chinese dominance of particular metals is one thing, but it is when the average householder gets concerned that the issue really becomes popular. Giving a speech several years ago on Erbium and 5G we noted that few, if any, of the public even knew that the jump from black & white TVs to colour TVs was made possible by Europium and behind that lay the Mountain Pass mine.

For the public, the new 5G technology seems to come out of the ether, literally, and thus it is not a good idea to ask too many questions about what metals make it happen because one would find out that (notwithstanding Huawei’s involvement) the REE component (Erbium) in 5G largely is China-sourced or China-processed. Who amongst the Great Unwashed (or experts) can tell us where other 5G inputs, like Scandium, Cesium and Tantalum, come from?

Alarm bells though have been ringing in the C-Suites (of Germany and South Korea, more than Detroit) about the vulnerability of the EV “revolution” to Chinese machinations and that has set off a furious hunt for non-Chinese supply chains.

Curiously though, the European list does not include Lithium amongst the critical metals, though this is probably predicated upon its upstream supplies being mainly from “friendly” sources such as Australia, Argentina and Chile. But with China dominating conversion of Lithium into Lithium ion batteries (and having a stranglehold on Cobalt from the DRC) it does not pay to be so simplistic in calculating where one’s sources might be.

Ergo, with China being the principal midstream processor, can one be so blithely dismissive of the criticality of Lithium?

The various surveys that followed on the heels of the original BGS Criticality rankings now reinforce the sheer number of metals at risk, though as one can see below each agency producing these lists has differing views of the criticality of different metals within their remit.

We can note from the lists above that the US regards most metals as having some degree of criticality.

Conclusion

The critical metals space is torn with rising demand for metals that have seen little, to no, development since before the Commodity Supercycle even began and is now seeing a secular decline in Chinese production due to over-production, exhaustion and environmental devastation. This makes for a rather dramatic tug of war.

It is now clear that the genie set free by Trump’s seemingly prophetic “Trade War” of the Chinese threat to supplies cannot be put back in its bottle. The “love” of the US industrial complex’s for cheap Chinese minerals has now even been called into question. We doubt that the East Asians (i.e. Japan, Korea and Taiwan) and the Germans can ever be easily lulled back into a false sense of security (of supply) by the Chinese.

The legacy of underinvestment and the lack of capital markets’ interest in specialty metals stories (beyond momentary pump-and-dumps) combined with the Chinese massive own goal in splurging its resource base in predatory pricing and, frankly, dumping over three decades has made for a secular crisis in metals supplies.

This crisis is likely to be enduring and will definitely result in the long-term higher prices (even shortages).

All the chatter does not provide money for projects. Unfortunately, it is only metal price spikes that seem to do so. The soaring price of Lithium and Cobalt in 2017 was a case in point and then the Vanadium surge of 2018. However, the REE putsch of mid-2019 waxed and waned so fast that no party got any financings done before the brief window of opportunity slammed shut.

Less sexier metals never even get their day in the sun. Tellurium or Cesium could quadruple and it would not generate more than a muffled whisper in the trade journals. The same for individual Rare Earths such as Erbium and Dysprosium.

We are of the opinion that the critical “state” of the metals world will remain as long as the West is not self-sufficient in its supply of specialty metals. The Chinese have shown themselves to be malevolent players and that was while they had the whiphand in many metals. As they start to lose their grip the frustrations will start to rise, already we are starting to see some rancour in relations with Burma over neo-colonial resources policies being imposed by China on its neighbour. Other Belt-and-Road “beneficiaries” have found that Chinese largesse comes at a hefty price. Is this mere sparring or the first shots in a monumental struggle over the world’s most crucial mineral resources?

In retrospect, Trump’s “Trade War” of 2018-20 may be seen as the “phoney war” phase of a much bigger tussle over access to the world’s scarce specialty metals resources. The criticality rankings are the playlists for the background music as this plays out.

Note from Publisher: Next week – on Wednesday, November 9th in Toronto, the inaugural Critical Minerals Summit is on! To secure a delegates pass, click here  — READ: Summit to Address the Impact of the $1.2 Trillion EV Market Demand by 2030 on the Critical Minerals Sector

CMI Presents “The Race to Achieve a Critical Minerals Supply Chain ROW” at the Critical Minerals Summit on Wednesday, November 9th

Toronto, October 31, 2022 – The Critical Minerals Institute, which was founded for education, collaboration, and to provide professional opportunities to meet the critical minerals supply chain challenges, is pleased to announce the inaugural Critical Minerals Summit (CMS 2022) on Wednesday, November 9, 2022, at the historic National Club in Toronto, Canada from 9 AM to 4 PM EST.

“With automakers planning on spending nearly $1.2 trillion by 2030,” says Critical Minerals Institute founder Tracy Weslosky, “it is equally as important to discuss not only where these battery materials are coming from and the technologies involved, but also where will we find the skilled professionals it requires.”

Themed The Race to Achieve a Critical Minerals Supply Chain, the Chairman of the Critical Minerals Institute Jack Lifton will begin the event with opening remarks aptly titled Scalability, Why the EV Timelines Simply do not Work.

Geoff Atkins, Founder of Cheetah Resources and previously Managing Director of Vital Metals who succeeded in bringing the Nechalacho rare earths mine into production will kick off the day with his keynote speech titled The Perfect Storm: Prioritizing the Demand Drivers Necessary for Mission Critical Minerals Supply Chain. 

A one-day, in person event, the Critical Minerals Summit is a bi-annual event designed to bring industry leaders and investors together to address scalability, resource and human capital needs, not only to meet the EV market demands, but to achieve the aggressive legislative timelines set around sustainability and climate change.

In the context of this theme, a special presentation designed by Prof. Saleem H. Ali, Ph.D., Chair, Department of Geography & Spatial Sciences, who is a Blue and Gold Distinguished Professor of Energy and the Environment from University of Delaware, will be presented during lunch. Author of a new book on environmental systems titled How Natural Laws Define Human Life (Oxford Univ. Press), his presentation will be followed by a Q&A style interview on the Global Critical Minerals Market with international expert and renowned market leader Constantine Karayannopoulos, President, CEO and Director of Neo Performance Materials Inc. (TSX: NEO).

Throughout the day, a series of 5 panels will be hosted by CMI Directors and the “Who’s Who” of international critical minerals experts, with leading industry CEOs participating as panelists. Highlights include the following panels:

• Securing the Capital to build a Supply Chain for the ROW.
• The Extraction & Processing Timeline Advantage
• Global Challenges in Advancing the Critical Minerals Supply Chain
• Dealing with the Resource Challenge, the Critical Minerals Shortage.
• The Power of Politics: Government Investment in the Critical Minerals Market

In addition to the above, the CMI will have Ed Buiel PhD, President & CEO, Coulometrics, LLC, speak on the paradox of producing graphite in North America and competing with China, along with special guest and Acting Consul-General, Greg Quinn from the British Consulate-General Toronto, who will address the key points from the recently released UK national critical minerals strategy.

The Critical Minerals Summit will be held at the historic National Club in Toronto from 9 AM to 4 PM EST. Space is strictly limited. For more information go to CriticalMineralsInstitute.com. To purchase a delegate pass, click here.

About the Critical Minerals Institute: The Critical Mineral Institute (CMI) is an international organization for companies and professionals focused on battery materials, technology metals, defense metals, ESG technologies and practices, the general EV market, and the use of critical minerals for energy and alternative energy production. Offering an online site that features job opportunities that range from consulting roles to Advisory Board positions, the CMI offers a wide range of B2B service solutions. Also offering online and in-person events, the CMI is designed for education, collaboration, and to provide professional opportunities to meet the critical minerals supply chain challenges. 

Special Thanks to the following Critical Minerals Institute Corporate Sponsors: ACME Lithium Inc., American Rare Earths Limited, Appia Rare Earths & Uranium Corp., Auxico Resources Canada Inc., Avalon Advanced Materials Inc., Critical Metals PLC, Elcora Advanced Materials Corp., Energy Fuels Inc., Grant Thornton LLP, Imperial Mining Group Ltd., Neo Performance Materials Inc., Power Nickel Inc., Save Canadian Mining, Texas Mineral Resources Corp., and WCPD Inc.

For more information email Tracy Weslosky at [email protected] or dial +1 416 792 8228 (CriticalMineralsInstitute.com | Twitter | LinkedIn).

Solvay S.A. (BRU: SOLB | OTCQX: SLVYY) (‘Solvay’) has started making news in the rare earths space. Solvay, a Belgian chemical company, acquired Rhodia in 2011 and with it the rare earth division with plants in France and China. Since Ilham Kadri was appointed the new CEO of Solvay in March, 2019, their only press releases on its rare earth division have been about three patent infringement cases surrounding materials for catalytic converters and their treatment of exhaust gases from internal combustion engines. Then suddenly over September-October of this year, there were 3 news releases that were focused on developments in Solvay’s rare earths division.

On October 11, 2022, Solvay announced the signing of a non-binding offtake memorandum of understanding (MOU) with Hastings Technology Metals Ltd. (ASX: HAS) (‘Hastings’) where Hastings will initially supply Solvay with 2,500 tonnes per year of mixed rare earth concentrate (MREC) from its Western Australian Yangibana Project. The Solvay plant in La Rochelle, France was founded in 1948 and originally was built for the separation of rare earths from monazite. The reported capacity for La Rochelle is 10,000-15,000 tonnes per annum of rare earths concentrate, which if accurate, made it a significant producer in the 1980s and 1990s. This would mean however that the agreement with Hastings alone would not bring the plant back to full capacity, unless Hastings expands production over time or Solvay sources concentrate from other producers.

This new MOU follows Hastings’ recent move to take a significant position in Neo Performance Materials Inc. (TSX: NEO). NEO and Solvay compete vigorously in all aspects of rare earths but as noted above the main area is in the materials for catalytic converters. This move by Solvay with Hastings comes on the heels of Solvay announcing its plans to expand and upgrade its plant in La Rochelle to process rare earths and recycle rare earth magnets. NEO has also announced its plan to put magnet production capabilities in Estonia where it has a rare earth separation facility in Sillamae.

NEO’s plant in Estonia has traditionally received its rare earth concentrate from Russia but given current political circumstances, it begs the question how long can this last? NEO does have an arrangement with Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) to supply concentrate from Energy’s uranium operation in White Mesa, Utah. This is the only uranium production facility in the USA. Energy Fuels is going to process monazite to produce RE concentrate. To that end, Energy Fuels announced a deal in May of this year to take a position in a heavy minerals deposit in Bahia, Brazil, which contains monazite.

Another announcement from Solvay this October was that it took 100% control of Solvay Special Chem Japan (SSCJ) through its purchase of the remaining 33% from Santoku Corporation. This facility, like La Rochelle, is focused on catalyst and semiconductor industries. Decades ago this plant was processing RE concentrate from China. When China stopped exporting concentrate in the late 1990s Anan Kasei, a Japanese joint venture between Santoku Chemical and Rhodia, stopped the separation of rare earths and bought intermediate products from China again to produce more value-added products. Ilham Kadri, Solvay’s CEO, commented on the transaction saying: “This transaction marks a logical step forward in our global plan to expand our leadership in Rare Earths specialties.”

It will be interesting to watch Solvay and NEO position themselves in the European market which currently only has one metal/alloy producer, Less Common Metals, and one magnet manufacturer, Vacuumschmelze, a German producer. Let the games begin.

For the past decade it has been China that has massively supported its battery and EV industry resulting in China now being by far the leader in EV production globally; and quite frankly a threat of totally dominating the future global auto industry as it goes electric.

Now, finally, the tide is turning with the Western governments starting to make very significant moves to support the EV and energy storage sectors (including batteries & the electric grid) and its supply chain. Today’s article gives a summary of major western governments’ new policies to support the EV and energy storage supply chain so far in 2022.

USA

As announced last week the DoE awarded US$2.8 billion of grants to accelerate U.S. manufacturing of batteries for electric vehicles and the electric grid. As stated by Energy.Gov.:

“The 20 companies will receive a combined US$2.8 billion to build and expand commercial-scale facilities in 12 states to extract and process lithium, graphite and other battery materials, manufacture components, and demonstrate new approaches, including manufacturing components from recycled materials.”

A key component of the US$2.8 billion in grants is that they will be matched with US$9 billion in recipient funds. Furthermore, the 20 company’s projects are spread across the key areas of the battery supply chain with the key purpose to build a new U.S lithium-ion battery industry.

As shown below some of the winners were lithium companies Albemarle Corporation (NYSE: ALB) and Piedmont Lithium Inc. (Nasdaq: PLL | ASX: PLL), spherical graphite (soon to be a producer) company Syrah Resources Limited (ASX: SYR), nickel junior Talon Metals Corp. (TSX: TLO) and several others.

Location map showing the planned project locations of the DoE project grant recipients

Source: Energy.Gov DoE

Earlier in 2022, the U.S government announced funding in the Inflation Reduction Act of US$369 billion towards clean energy and climate change initiatives.

The Biden Administration is certainly leading the West in supporting the environment and building up a new clean energy industry with factories and jobs in the USA.

Canada

Canada has recognized that it is extremely well positioned to be a supplier of EV metals and components due to its inherent wealth of critical raw material resources. In the 2022 Canadian Budget the government allocated an additional “C$3.8 billion for critical minerals, including those that feed into clean technologies”. Clean Energy Canada stated:

“This new funding will help Canada realize its vision of building an “end-to-end” battery supply chain through which Canada can do it all, from sourcing the materials to building the parts, batteries, and clean cars.”

Specifically, the Canadian government will spend up to C$1.5 billion over seven years, starting in 2023-24, for infrastructure investments that would support the development of the critical minerals supply chain, with a focus on priority deposits. Many very promising Canadian projects, such as Frontier Lithium Inc.’s (TSXV: FL | OTCQX: LITOF) PAK Lithium Project, need roads to be built to help bring their projects to production. Canada has a plan to make this happen, albeit rather slowly.

Australia

The Australian government under Prime Minister Albanese has brought a new focus towards EVs and climate change. As announced last week the “support for critical minerals breakthroughs” policy is designed to accelerate the growth of the critical minerals sector. The announcement stated:

“The Strategy will complement other Government initiatives including the National Battery Strategy and the Electric Vehicle Strategy. The National Reconstruction Fund will include the $1 billion Value Adding in Resources Fund which will work alongside the $2 billion Critical Minerals Facility…….The Government will also allocate $50 million over three years to the Critical Minerals Development Program for competitive grants to support early and mid-stage critical minerals projects, building on the $50 million recently committed to six key projects across Australia.”

The winning “six key projects” are owned by Alpha HPA Limited (ASX: A4N), Cobalt Blue Holdings Limited (ASX: COB), EQ Resources Limited (ASX: EQR), Global Advanced Metals Pty Ltd, Lava Blue Ltd., and Mineral Commodities Ltd. (ASX: MRC).

Europe

Last month the European Commission announced a new policy proposal called the ‘European Critical Raw Materials Act’. The announcement emphasized Europe’s need to secure a safe and secure supply of critical minerals, notably lithium and rare earths. The announcement stated:

“Lithium and rare earths will soon be more important than oil and gas. Our demand for rare earths alone will increase fivefold by 2030. […] We must avoid becoming dependent again, as we did with oil and gas. […] We will identify strategic projects all along the supply chain, from extraction to refining, from processing to recycling. And we will build up strategic reserves where supply is at risk. This is why today I am announcing a European Critical Raw Materials Act.”

The European Critical Raw Materials Act is still being developed but it looks like it will follow along similar footsteps as the U.S Inflation Reduction Act, supporting and building local supply chains, but also relying on ally countries. The European Commission stated one objective as:

“To facilitate the roll-out of targeted raw materials projects in the EU, the Commission should be empowered to list Strategic Projects – which would be labelled as of European interest – based on proposals from Member States. These projects could benefit from streamlined procedures and better access to finance.”

An excerpt from the recent 2022 State of the European Union address discussing the need for Europe to source critical raw materials

Source: European Commission

Some possible winners might be rare earths processing company Neo Performance Materials Inc. (TSX: NEO) and European Metals Holdings Limited (ASX: EMH | AIM: EMH | OTCQX: EMHXY). The former owns the only commercial rare earth separations and rare metal processing plant in Europe and the later has a JV 49% ownership of the largest hard rock lithium project in Europe.

Closing remarks

The Western governments have woken up from a decade long slumber and are now finally moving to build key critical raw material, battery, and EV supply chains both locally and with ally countries. Project funding and permitting are key obstacles being addressed as they are the reason why much of USA and Europe have virtually no EV supply chain today.

As we approach COP 27 starting on November 6, the 2022 awakening of the Western governments should lead to one of the biggest investment themes this decade. That is, investing in quality companies that are likely to succeed in supplying the EV and energy storage supply chains as the Western world looks to gain independence from China.

InvestorIntel has been bringing attention to these companies for more than a decade and provides the ideal starting point to research and learn about promising critical raw materials companies. Stay tuned.

Disclosure: The author is long Albemarle Corporation, Piedmont Lithium Inc., Syrah Resources Limited, Frontier Lithium Inc., Cobalt Blue Holdings Limited, European Metals Holdings.

Disclaimer: The editor of this post may or may not be a securities holder of any of the companies mentioned in this column. None of the companies discussed in the above feature have paid for this content. The writer of this article/post/column/opinion is not an investment advisor, and is neither licensed to nor is making any buy or sell recommendations. For more information about this or any other company, please review all public documents to conduct your own due diligence. To access the InvestorIntel.com Disclaimer, click here

Ucore Rare Metals Inc. (TSXV: UCU | OTCQX: UURAF) just announced a mutual commitment between themselves and the State of Louisiana to establish a rare earth separation facility in the state which Ucore refers to as a Strategic Metals Complex (SMC). This is a change in direction from the earlier management drive to build a facility in Alaska. The government of Alaska had committed to supporting this approach through a bond of US$145 million to develop the Bokan Project for infrastructure and construction costs. This is a significant shift — which, I view as positive.

From their news release, they point to some advantages “Critical markers for success, such as streamlined inbound and outbound freight, ample supply and proximity of chemicals and reagents, attractive energy costs, the robustness of labor pools, room for ramp-up and production expansion and community support, including technical education infrastructure were all part of the size-up.” In addition, they are evaluating several brownfield sites which typically come with infrastructure already in place like power and buildings which would reduce the capital investment.

The Louisiana Economic Development (LED) sent a non-binding Letter of Intent (LOI) to Ucore last week. The LED laid out a 10-year US$9.6 million economic incentive package in consideration for Ucore’s projected investment of US$55 million. There may also be additional incentive’s once a site has been chosen which could bring the total package up to US$11 million from the LED.

According to the LOI, the following were identified:

• The financial, economic and tax incentive offers described in the LOI are estimates based on the Company’s commitment to and fulfillment of its capital investment, employment and expected payroll schedules for the Louisiana SMC. This includes: (i) a total capital investment by the Company for the Louisiana SMC of at least US$55 million by December 31, 2026; and (ii) new jobs in Louisiana at the Louisiana SMC in the amount of 45 jobs in 2025 with an annual payroll of US$2.4 million rising to 80 jobs in 2034 with an annual payroll of US$5.2 million.
• Louisiana’s Industrial Tax Exemption Program can offer up to a 10-year tax exemption to the Company. LED estimates that the exemption may result in up to US$6.0 million in tax savings for the Company. The State’s Industrial Tax Exemption Program is administered by and will be subject to a contract to be finalized between the Company and the Louisiana Board of Commerce and Industry and requires approval from Parish and municipal governing bodies as well as the Parish school board.
• Louisiana’s Quality Jobs Program provides a 4% or 6% payroll rebate on the gross annual payroll for qualifying new jobs for up to 10 years. The program also refunds state sales/use tax paid on construction materials purchased during construction or a 1.5% project facility expense rebate on certain capital expenditures. LED estimates that the value of this program could be up to US$3.6 million for the Company. The Quality Jobs Program is administered by and will be subject to a contract to be finalized between the Company and the Louisiana Board of Commerce and Industry.

Initial plans are to build a plant that will produce 2,000 tonnes per year (TPY) of separated rare earths by the second half of 2024. Plans would be to expand to a world scale production level of 5,000 TPY by 2026. The technology to be used is Ucore’s wholly owned Innovation Metals Inc. Rapid SX^TM  technology. This has been piloted for some time now at Kingston Process Metallurgy (KPM) to develop knowledge of the process and design parameters.

This appears to be the first major investment in rare earth separation processes in the USA, although there are others also talking about this including Lynas Rare Earths Ltd. (ASX: LYC) and MP Materials Corp. (NYSE: MP) with grants from the Department of Defense (DoD). MP received US$35 million and Lynas US$120 million. This begs the question of whether or not the DoD will support Ucore with this plan of action. With a current market cap of approximately US$30 million raising the funds through equity financing would be very dilutive to existing shareholders so either the DoD assists or Ucore gains a strategic partner or a combination of these two will allow the financing of the SMC.

I am sure more news will be forthcoming as engineering and construction will likely need to start by mid-2023 to achieve the stated target of production in 2024-H2.

Disclaimer: The editor of this post may or may not be a securities holder of any of the companies mentioned in this column. None of the companies discussed in the above feature have paid for this content. The writer of this article/post/column/opinion is not an investment advisor, and is neither licensed to nor is making any buy or sell recommendations. For more information about this or any other company, please review all public documents to conduct your own due diligence. To access the InvestorIntel.com Disclaimer, click here