Everybody screams are heavy. Rehearse in USA and terrible.
Well, last year China exported to the US 60kg of dysprosium,
10kg of turbulent. It's not really a very
irrelevant market. Energy.
It's tacky. I don't know if you've been
following what's going on. In the rare earth market, maybe
you've been paying attention. Rare earths have become the
hottest topic in global news, right China.
US embargoes? Export crunch downs.
It's called mainstream, like the the conversation around rare
earths, which is kind of crazy because we're in the world of
like mining news and I don't feel like I know enough about
this yet somehow the mainstream has like an opinion on rare
earth, on rare earth projects, like share prices of weird
projects are going crazy. It's a, it's a, it's a truly
bizarre time. Weird projects to say the least.
Yeah. So I just really wanted to kind
of get to the bottom of what's going on, what it means, what's
relevant to markets by summoning three of the best thinkers I
know that are obsessed and addicted to the rare earth
industry. A truly All Star crowd like rare
earth observer, DK sustainable dude, this is, you know, All
Star type material to actually just teach us and help us and
the money miners learn about what is going on, right?
Absolute All Star crowd I'm. I'm pretty excited to share this
conversation. This panel of absolute rare
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Utterly delighted to be joined
by three of the preeminent experts in the rare earth
industry. This expert panel is led by none
other than the rare Earth observer, Thomas Crummer.
Everyone would be very familiar with your blog, which is
prolific for anyone who wants to get up the curve in rare earth.
An up and coming person who's been writing very thoughtfully
is Sustainable Dude, which is the frog you see on camera right
now. Hilarious.
Well done. I'm loving that Sustainable
Dude. And to round out the panel,
we've got Dylan Kelly or DK of Terror Capital, who has come on
before and has that investor lens in the buy side, kind of
equities in the names and has shared with us generously in the
past his rules for investing in the very complex rare earths
space. Because by the way, a lot of the
time, gentlemen, thank you so much for making the time to talk
about rare earths. What a topical commodity to be
talking about right now. I've never seen rare earths so
hot, although I'm sure they have been in the past.
It's not entirely rare, after all, for it to be topical.
No, it's true. I think I also made a tweet
about this before. Interesting red flag.
Consider it a red flag, and now it's market foresight, so times
can change. Absolutely.
What is going on? I'm struggling to make sense of
what's real, what's not, what's policy, what's conjecture, what
is moving markets like if we were just to kind of step back
and assume that I know nothing about what's happening
geopolitically right now, which is true.
What the hell is going on? I want to go straight to the gut
on all things in the subject matter.
Thomas. What's, what's the story mate?
What's is the geopolitical problem?
Reality. Or is it really just a fuss
about nothing? Well, when, when China started
messing around with with gallium and germanium, I, I'm used that
if, if they would blanket Bandra's exports this that they
would shoot themselves with an elephant rifle into both feet.
So, and actually they didn't several years ago, I think
somebody in the Chinese Foreign ministry said that China does
not want to aid the production of weapons that can threaten
China. And what they did I think over
many years was to work out which are the most relevant materials.
And I think this seven element ban or say dual use
classification may have come. Anyway, it is not really related
to the trade war, and that is why the Americans have also so
much trouble to make the Chinese take a step back from that,
because from the Chinese side it may not be really related.
It would have come anyway. My view for all of the seven
elements, for each of them, there is at least one Pentagon
contractor who is a major user of this product, of the relevant
product. That is probably why these seven
were chosen. The seven also referred to the
six strategic weaknesses that the Chinese military has
published. I think it's less trade war
related. Also now the result from the
talks in London shows that the Chinese side has absolutely no
intention to reverse this in any way.
I'm quite interested like dual use makes total sense to me.
What I've found really interesting is that like the six
records we've seen so scanning I'm leaving aside right now
because it's like be covered in very different process than the
other ones. Generally, what happened
interesting is it also coincides with very, I would say
vulnerable feedstock supply chain.
I'm wondering what your thoughts are and does it play a role in
this what we've seen today? I think Dylan can sing a song
about this. This in general a problem of
everyone who wants to enter rare earth that rare as production,
rare separation, rare as metal making and so on that the cost
are and the CapEx are probably three times as high as sale in
China. By extension, it would like last
year in Tokyo, we had the Rare Earth Industry Association
conference and I was hosting a panel of junior minor rare earth
hopefuls and I just tossed the question also what level must
rare earth prices be so that you become feasible And it was
Unizomo, the same prices must go up three times.
That is a real problem. It's also related to the know
how say if you look at recovery rates of of junior as miners and
in the West they are below anything that would be
licensable even in China, they really squeeze the lemon dry,
whereas we recover anywhere between 40 and 80%, you know, so
that that already is a cost factor the the know how.
Interesting. Would you say like putting such
a system in place like we've seen with this expert licensing
system is also maybe to say Myanmar really gets messy.
Like it's already messy, but there's still material flowing,
albeit very varying per month. Once it's if the dries up, is
this something to to like? Are you trying to like hatching
them themselves here? Is that a possible scenario?
You see that that one very common misunderstanding is that
rare earth products should be commodities.
It is. China has made great strides to
commoditize them to make sure that products are
interchangeable and therefore there is more competition among
manufacturers. And of course, you can trade
them on exchange. In the West, we have no
industrial standards for rarest products.
I understand the international standards organization ISO has
been on internationalizing Chinese industrial rarest
standards for 10 years. And I'm not sure if that is the
preference of the ISO, but they've come up with
sustainability standards, recycling standards, packaging
standards, you know, all the fringe stuff, but nothing of
substance. I asked one member of the group
at ISO who is at it, and he claimed that the United States,
part of the ISO is not so really interesting having standards for
rare earth products. So these are not commodities.
Every user has his own purchase specification, you know, and
they're, they're all test processes and so on.
Nothing is standardized. So you can't in the West, these
are specialty chemicals. And also you have to must really
look at what are we actually buying in China.
About 60 to 70% of the imports of the US, of Japan, of the EU
are the rare earth elements, Lansano and cereal.
What do we use them for? Well, we use them for the
production of fossil fuels and the consumption day off.
Yeah. So we are talking about fluid
cracking catalysts for producing gasoline, diesel, whatever you
want, you know, and we're talking about the catalytic
converter in internal combustion engine and hybrid cars that is
our main dependency in rare earths products, no.
One talks about that. Magnet dependency, that is
written on a different piece of paper.
In terms of rare earths, yeah, everybody screams, ah, heavy
earths in USA and terrible. Well, last year China exported
to the US 60kg of dysprosium, 10kg of terbium metal.
Yeah, as metal, not as oxide. 10 tons of Lanzano metal, 12 kilos
of scandium and the 236 kilos of of metal alloys.
These are the metrics. If you go into the compounds,
that's a slightly different picture.
Yeah. But you know, it's not really a
very relevant market. No, that's, that's definitely a
very good point. I think we just said the main
concern with the USA government would be more in the high
performance magnets now that we see humanoids percent
potentially being deployed if these these kind of things.
Yeah. See the the primary dependence
of the West is on the products that are made from the earth,
including rare earth permanent magnets.
We have no value chain behind it.
That's why it's so funny. You know, if there's someone who
says we are going to produce 4000 tons of NDPR per year, you
know, in Europe, right? So who do you sell it to?
There's no, but you need a metal maker who makes metal out of
this, and then you need the magnet maker who takes the
metal. But there's another little
detail that everyone always forgets.
You know, you leave the two elements, neodenium and
prosodenium in the proportion that you found them in your
deposit. You don't separate them.
But these proportions are different from deposit to
deposit. Like Linus says, 78 to 22.
I don't know right now off hand what is MP materials.
You know the standard prescribe 75 to 2585 to 1570 to 30.
You will not go lower than 70 to 30 because then prozodinium will
kind of affect the coercivity of the magnet.
These are not commodities. You get chemical compositions
prescribed by your customer and that says you have a 78 to 22
product and the customer wants 75 to 25.
What do you do? Nobody is separating ND and PR.
So where should the balance come from to make a metal that is
according to the specification of the customer?
Yeah, really. People don't go into the
details. So that that kind of throws into
doubt the entire ability to have supply chain independence, you
know what I mean? The specifications matter.
It's almost implausible to build out an entirely independent
supply chain that can make unique customer demands
independent of China. Well, it sounds to me like to
that point, policymakers are pushing far too hard thinking
that they can build a supply chain out without realizing the
full complexity of how many steps there are between pit top
and finished product. The second part being how much
noise is thrown at the wrong end of that argument and continually
sort of pushed ahead without really thinking through the
complexity, the cost and the economics of this.
It's farcical to think that we're ever going to chase, you
know, supply chains that are this discombobulated with some
sort of economic return of any stretch, even if we were to
increase prices, you know, 3 to 4 fold.
So in my mind, I think there's so many mainstream narratives
that have spun on the space that just don't hold up to reality.
I think, Thomas, you're making some good points just cutting
them off. But what do you make, Thomas?
Is the world going mad over something that's largely
relevant? There are several points to
observe. First of all, I think it is
important to understand that the high performance and the Feb
magnets, so these are the ones that still perform at high
working temperature say 180°. You know, they are arguably
maybe on behalf of the market. You have to visualize that China
last year exported 58,147 tons of Rarer's permanent magnets to
130 countries. These are often commodity
magnets that can stand a working temperature of maybe 80°C.
But which of our rarest hopefuls wants to go for these magnets?
Nobody. All of them claim for themselves
that they can manage the high tech composition of permanent
magnets that are reaching a working temperature of 180°C or
even 230°C. So they're trying the impossible
rather than to go from the simple and 1st because you know
since 2009 there has been no NDFEB production in the United
States. You know in Germany vacuum have
the minority joint venture with Jungka Sankwan in Beijing where
they get the blanks and ship them off to their subsidiaries
for the final processing. We should have actually gone
from the simple stuff that we may be able to do.
Then, of course, after 2014, when China lost the WTO case of
the EU, Japan and the US, all efforts in the US rested.
Everything just fell apart in the EU, they continued.
But it was more to prove activity rather than to come up
with something tangible. So it was very important to
support projects that are sustainable and environmentally
benign. It was not on getting something
done. We approached from the two
different ends and had nothing in the middle say it doesn't
help us if we mine a rare earth also concentrates if we do not
have the industry that uses this and separates the rare earth
produces the more than 50 different compounds of rare
earths that China exports to us. And then a further downstream
industry which takes part of this, makes metals to supply
those users who require metals. Yeah, I, I think that's very
unique about the supply chain as we see nowadays, especially when
we're trying to build in the West is we're trying to build
this from upstream to downstream.
Normally you would do the other way around from downstream to
upstream. And like Thomas mentioned,
these, these aren't really commodities in the general
sense. So there's, there is so much
variety between the, the mineral concentration treats the
carbonate, if it's oxide, the many, many things.
And now we're seeing a host of junior mining projects which are
trying to mark their products. They're finding middle Western
buyers. It's all going into China
because China has many companies which can take these these very
various products. So I think one of the most
important things to do, it is like Thomas said, build your
magnet capacity in the West, then go search for feedstock
subsequently. I would say like 5-6 years ago,
we should have simply started doing NDFEB magnets and we would
have sourced the metals in China and we would have dared them not
to supply them. And at that time, China had
absolutely no appetite for confrontation.
So we may have actually succeeded.
Of course, what is always getting buried a little bit is
the role that our Japanese friends played in this whole
mess. First of all, Japan is regularly
40 to 50% of China's total rarest compounds and metal
exports of the export value, not of the volume.
The volume is smaller, and they were sitting on the core
patterns for the NDFEB magnets. And Hitachi Metals had the
arrogance to believe that they can influence the supply and
demand of NDFEB magnets if they control the licensing of the
process, that they don't give a license to anyone who wants one.
But look at the whole market picture and see, oh, would this
throw the market off balance? You know, and that is why the
Chinese suit Hitachi Metals, they said that they're abusing
their market power because Hitachi Metals, if somebody was
using Hitachi's process and starting to produce NDF EB in
China, Hitachi would sue them. But had this manufacturer asked
for a license, he wouldn't have gotten it from Hitachi Metals.
Had Hitachi Metals not had this policy, we would have probably a
much larger distribution of NDFEB magnets, left, right,
center. And do you see any joint
initiatives between the Japanese and the US in Europe?
Now you have this project that involves Solvay less common
metals and cherister and they based on the assumption that
they can get the Namibia Nabibia Critical Metals project
lifestyle going which is best see no time with a very
favourable proportional composition.
But you know, this project is moving at snail's speed and I do
not think it will get going before 2030, maybe not even
beyond. Yeah, feed soot is definitely a
problem with which you see in many projects in the West.
I do think we see a changing Western perspective on how we
source especially heavy red concentrates.
We saw the recent MU it's still an MOMOU, but Linus entering an
agreement with the Malaysian state of I've got the state name
but for ionic clay concentrate. I think it might be a watershed
points where Western companies may follow suit here in Malaysia
and Western companies are opening themselves up for yeah
what is effectively in situ ionic clay leching, which is
environmentally questionable. I would say I think Thomas and
didn't have some more perspective on this, but I do
know that that Malaysia is really looking to expand their
industry. I think they want to target like
3000 tons of trio by 20 thirty 10,000 tons of NDPR which is I
think there might be western companies that looking to tap
into that I. Think that's an interesting,
interesting point. Who would have thought that the
Malaysians that actually want to increase the amount of railroad
production is coming out of the country?
Does it? Your license still expires in a
couple of years, Doesn't. It no, don't continue to roll it
just long as the WLP doesn't come anywhere near the near
them. But I think, yeah, there's well,
one, one point I wouldn't mind touching on is this notion that
we all think about clays as being posted in the parts of
southern China branching off into Myanmar.
But as we know, clays somewhat abundant and there seems to be a
whole series of discoveries after discoveries scattered all
over the place in high rainfall areas.
Minister Ice and the caldera with Mei and VMM come to mind,
but also what Sarah Berto's got. We're talking about some of the
clays that are occurring up and down the Malaysian peninsula.
I mean, in my mind, it seems like we're discovering them
relatively frequently. But the ability to actually
bring these things into production is still another
question. Thomas, I wanted to get your
thoughts on that. In my mind, I was working the
thesis that if Clay's work at Sera Verde gets up and works and
makes money, we probably don't need to build another Hard Rock,
rare earth, vertically integrated mind.
But it sounds like there's some troubles there.
There's still some questions over.
It first of all, I would like to challenge the notion that we
don't have enough feedstock. China imported last year as
direct feedstock to the rarest industry, 177,000 tons.
What is the lack of feedstock here?
Then on top of that, if you add to that the heavy mineral sands,
which by and large in average may contain about 1% monazite,
some 2, some nothing, China imported 6.8 million tons of
that with the clear objective to extract monozide from that.
See a totally different problem here.
That is that rare earth love radioactivity.
So inevitably for practically most of the feedstocks, which
sometimes includes ionic clay, there will be radioactive waste.
In the US there is only one private company that is licensed
to dispose of such radioactive waste, that is Energy Fuels.
In Europe, because of not in my backyard, there are only
temporary reception facilities for nuclear waste.
It is almost impossible to to get some permanent facility
going. I understand they are
commissioning now something for nuclear fuel rods in Finland,
but for this type of waste mostly thorium.
But then if you, you have uranium, you have actinium, you
have radium, you know, nobody wants to have it.
I mean, Solvay, they still have thousands of tons lying around
in the Lavrochet factory since 1992.
You know, the total quantity got distributed this about 6000 tons
plus the rest of the quantity somewhat distributed in
temporary shelters across France.
You know, So the real point here is the, the particularly the EU,
but also the Americans, they actually can't handle it because
they don't know where to put this waste.
And frankly, they don't want to incur it because what the, the,
the products say like electric vehicles shall appeal to to
environmentalists also, you know, so how is that if, if at
the front door, you know, there are fights over permanent
disposal facility for the radioactive waste that incurs
when you want to produce the magnets for this electric
vehicle, you know, then suddenly it doesn't feel so green
anymore. And that is actually behind EU
policy. They are looking for strategic
partners, you know, as far as possible away.
So all this mess from mining and the radioactive waste subject is
totally out of mind and out of sight.
You know, they selected a project in Malawi as a strategic
project for rare earth. At the very front door at the EU
affiliate in Norway, there is a gigantic deposit that is really
high in trio and that is very, very prospective.
It beats anything else anywhere near the EU.
But it has not become a strategic project because it
comes with ample portion of radioactive waste.
Yeah, that is the fact. On on top of that, they are also
victims of the foghorns of junior rare earth miners who try
to make people believe that You Delight can be a rare earth
resource. You know, the research into
separating rare earths out of You Delight has been going on in
Russia since 1930. So far we don't have anything.
And now one of the miners in Sweden with the You Delight
deposit, he now says, oh, we're looking for financing to 1st dig
the UD light out and then leave it there and wait until the
process is far. How to express from that?
The Russians have waited for 95 years, you know, so maybe made
another 95. And it's the same in Greenland.
The pain was tested in the Euro rate program and I got very
interested, so I looked up all the documentation and
everything, but it was not clear if they ever managed to extract
anywhere else from that. So I wrote to the company who
did the separation, you know, 2 times.
They didn't reply because they knew that I knew that they had
failed. You know, this is of course a
side, say Warzine, but the real issue here is the environmental
problems that the politicians in the US and also in the EU do not
want to have these discussions about permanent disposal
facilities of radioactive waste and things like that.
Isn't the permanent disposal facility?
Isn't that a sticking point for Linus in Malaysia?
Like aren't they? Aren't they supposed to be
building APDF in country there? Yes they do, at great expense.
They also built a facility to produce rare as carbonate and
Australia and extract the sodium content there.
The composition of what is mined at Mount Wade has changed a
little bit. Based on the previous
composition, Linus output of sodium per year was
approximately 150 tons in a huge stack of phosphogypsin.
I I think the company had a point when saying this is really
almost irrelevant, but Malaysia has been through the bucket
mirror disaster of Asia rare earth, a Mitsubishi company
where the contractor who had been hired to dispose of the
sodium waste properly had duty fully discharged it wherever he
deemed fit by the roadside. Basically, you know, and that
created higher cancer rates, miscarriages, deformations at
birth and things like that. The whole line.
So in Malaysia, the rare earth mining that is now being
supported from the ionic clays is called non radioactive rare
earth mining. So back to liners.
They had to build a facility, but it's, I mean, what is the
facility? They dig a big hole and then
they line it out with two liners of polyethylene plastic and then
they pile the phosphogistin on it.
Versus what we're doing and what Kalgoorlie throwing it on the
back of a truck and just putting it back in pit, no need carefree
what the contrast. It is.
It is seriously a problem and I think it would be much better if
this was discussed openly and a solution would be offered rather
than everybody keeps it under the carpet.
Every junior miner who sends samples for analysis, for every
drill hole, he gets the full composition of everything that
is inside. And if you read the drug
reports, you also see that sodium and uranium was tested,
but they never published the results.
You have to dig that out, you know, and calculate back and
then you come to a value that is the probably likely content of
radioactive material, you know, like this pansana thing in
Angola. The whole area was peddled by
the Angolan government for uranium and thorium, you know,
and then early, early Pansana in the previous incarnation as Rift
Valley where careless enough to publish the results of thorium
and uranium as well. You know, maybe they will have
10 times the output of liners and no one looks at the
consequences. I think one point I'd add to
there, it's almost when it comes to the radioactive elements
around the clays. I managed to go out and visit
Ansto not so long ago, and I know I'm going to butcher some
of the quotes there, but one of the elements that I came away
from was the existence of low grade in a concentrate or low
grade in situ is almost a side issue.
It's what happens when you treat it in any sort of way.
You get this activation of isotopes of those elements into
some far nastier things that perhaps, well, I couldn't
actually name some of the elements that were getting
thrown off, but they sounded particularly bad.
And perhaps I just simplified that whole sector as being
simple. OK, there's, it's all the bad
stuff has been washed away in situ.
It's all clean and green. But it turns out, hang on, you
add a little bit of, add a little bit of heat, add some
chemicals in one way. Yeah, it can dramatically
accelerate the concentration of those nasties and make it a a
transport handling issue and ultimately a disposal issue.
Yep. And and I I see hopeful and
Brazil had the experience of that.
I look at it very primitively. Generally, sorium will drop out
during flotation, but the uranium content is water
soluble. You know, this goes, this can go
all the way to the final product, which also an American
rare earth hopeful has experienced.
And this is really something that needs to be dragged out
into the open. I do not believe that we will
get to any rare earth solution if we do not address these
issues. See, the Chinese monazite is a
typical usual suspect monazite. The classic monazite has about 5
to 6% of thorium and about 0.5 to 0.6% of uranium inside, plus
other nasties. But that is basically it, you
know, so monazite is actually a fantastic or to use for, you
know, for a rare separation. It's not bad.
China banned the mining in 2012 because they had absolutely no
control over where this waste is going.
And it was going into rivers and lakes, you know, and landfills
and so on. You know, 2014 they closed all
known IIC deposits in South China also for environmental
reasons. This, this, this leaching with,
with ammonium sulfate is, is a disaster for the water
resources, be it groundwater or surface water.
And if you, I mean, I'm sorry to say, but in, in, in Malaysia,
I've, I've seen two environmental risk assessments
fired on ministry websites and the assessments were very open
about it and they disappeared from the website.
Strangely. You know, this, there's this,
you know, on the Internet, things evaporate, you know, you
can't control it. So this is something that they
completely ignore in Malaysia, this.
And that is not good because what, you know, what is the
alternative to in situ leaching? In situ leaching, you can leave
the trees where they are. If you go for strip mining and
tank leaching, you know, what do you do to the rainforest?
Yeah. Absolutely.
In tank leaching might be even more.
Environmentally, actually, I think iron absorption claims
place on aberration. It's not on top of that, you
know, since we are not good at it.
We've seen that with junior miners with the trial leaching,
they managed to leach the physically bonded ions, but the
chemically bonded ones not. So our recovery rates are
anywhere between 40 and 60% on an already low trio resource.
Yeah, this is all not very good. So I think it's an aberration.
I really think we should go for the traditional ORS that are
provenly working. I'll happily take the other side
of that trade just a bit, the arbiter of companies doing
things better than what they've been done in the past.
Is your view there DK that in situ will return and will be
done responsibly or do you think it'll be done, you know, tank
leaching? If it's going to be in Western
hands through North American, Australian listed group, you're
not going to get away with full stop.
It's just never going to get off the ground.
Investors won't back it, we won't back it.
These guys need to bend over backwards to ensure that
whatever they're doing, the footprint and the externalities
environmentally are rock solid. I mean, I think every side visit
that we went to in Brazil always went through the process about
looking at what nearby mining operations from bauxite had done
on the rehab front. And there seems to be a pretty
simple case about the fact that it's so low strip, it's
relatively like thick and therefore the footprint isn't
actually that big. And then such a high rainfall
area, the ability to regenerate was pretty high.
But it was all about the chemistry set about what you're
putting back into the ground. I mean, get rid of the ammonium
sulfide, which of course, but what was being put back in.
And I think that's what I observed to be probably spending
a lot more time in terms of the test work, trying to understand
how can they put something back that's Inuit and the cost
associated with that. There's always seem to be lots
of different tanks and lots of different complex parts.
The flow sheet, trying to get that right.
Can it be done well? I'm not sure.
I haven't seen it yet. But to do what was like a
cottage industry function in certain parts of southern China.
Now Myanmar, they can't do it like they've done.
It's not going to happen anywhere else.
That's the Western oversight. So I kind of think we could do
it, but at what cost? And could they ever raise
capital? I doubt it.
What's going on with Sierra Verde at the moment?
I know that they needed more capital recently, some ramp up
challenges, but we're more capital fixed their issues and
they'll find a way to be profitable.
Yeah, that's really hard. So sorry.
Go ahead, Thomas. No, please, Please go ahead.
No, as I only have a few words to say about this.
I mean they're private. We don't hear really much about
them or they're not really putting any information out
there. There are some voices in the
industry that say like they have problem with their filter
systems which are kind of ruining recoveries there.
That's all I know. So from what I've heard, the
ramp up is not going as planned. Maybe Thomas can give more
respect on this, but this certainly has like with
influence on what what what we'll see happening in Meteoric
and for it is. The mining doesn't only happen
in Myanmar, it also happens in Laos at ever increasing rates
and also in Malaysia. We are seeing more and more
coming out of Malaysia. I know some couple, a couple of
guys there. That's of course Chinese capital
and Chinese labour involved in Malaysia.
Anyway, it is done the cheapest possible way.
And if you pump ammonium sulfate solution into the ground, 10
millions of litres. You know, it's naive to assume
that you could clean this up in any way.
This simply doesn't have so tank leaching.
But we know that these type of clays, they are found in areas
of heat and a lot of rain. So that's basically tropical
rainforest. So if we say, OK, this deposit
is very wide and it's only 40 meters deep, or let it be 50
meters early strip mined, you have to remove all the greenery
and you will not restore a forest within a few years.
It simply doesn't happen. There are also cases where strip
mining is removing a layer of clay that used to be holding the
water, you know, so that the soil remains humid and suddenly
of desertification. Some satellite photos from
Myanmar suggests that happening. You know, so I really do not
believe in iron absorption clays being a solution of the problem.
So that raises an interesting question.
Say we don't want to source heavy from ionic class, where do
we source them I mean? Very small deposits.
It's also sometimes part of monozide deposits.
Monozide itself tends to have a favorable composition.
And don't forget we are engineering for example, for the
magnet rare earths, whether in the West or in the east,
particularly in China, we are engineering the heavy rare
earths out because this is something that most union rare
earths miners simply don't understand, the rare earths
inherent imbalance. Every deposit has a different
proportional composition, but none of them has a composition
that is exactly according to the market demand.
So that means we, if we want to produce enough neodymium for the
market demand, we over produce lansanum, cerium and samarium
and we under produce dysprosium, terbium and probably hernium.
So if we then say ah no, no, no, we changed that.
We make this prosium the target and we produce this prosium
according to market demand, then we will over produce also
neodymium and prosium, not everything else for that matter.
And God save us if Thulium one day should take off.
The whole balance will be screwed if you have to.
There's a reason why Lancelon costs only $0.60.
There's a reason why Cerium only costs $1.60.
There's a reason why Terbium costs $1000.
You throw the whole thing out of balance, whatever you do.
And this is something the Chinese have been wrestling with
for decades. And people from the outside who
look at it, they think, oh, they are manipulating the prices.
They keep it cheap in order to keep us out of the market.
Nothing could be further from the truth.
It is supply and demand, and it's the living hell of the rare
earth inherent imbalance that you see at work.
That's all very good points. I totally agree with you there,
which does raise an interesting question.
You talked about natural ratios. We've seen the carbon tides in
monoxide sometimes very different.
But since I only know of one pureplay, seen a time deposit
which has like a small chance of making it bronze range.
Think you know it very well. So what could be if we don't
want to do in situ leaching? What could possibly fill this
gap? Are there more pure casino time
deposit? Do price need to rise in order
for bronze range to be economical?
Yeah. First of all, there are two
projects under development. One is another, minerals and the
other one is Namibia critical metals.
These are the famous ones under development.
The other thing is, and that is also where China is the
trailblazer. They engineer dysprosium and
turbium out of the magnet. For example.
They have a technology and it's patent and it's grain boundary
diffusion. The idea is OK, we need to alloy
the NDFEB magnet so it becomes more heat resistant.
But where does the heat impact the magnet?
On the surface? Not inside.
So inside you don't need that much dysprosium.
You actually don't need any at all.
You need it at the outside. This grain boundary diffusion
technology allows them to reduce the dysprosium content while
maintaining the temperature resistance.
You know so. So there are two ways to address
this. One is of course produce a
little bit more, but the other one is to engineer them out of
the applications as far as possible.
To what degree do you think like the easy gains have been made on
that front, like has been around for a couple years, like yes, we
see man plateau here or will we see further reduction?
Well, there's there's another trend that was discussed last
year at the Rare Earth Industry Association conference.
I do not know what has become of this, but it's simply cooling.
You have a cooling system, you have batteries that get hot, and
when they get hot they don't perform that well.
So there are automotive developers who work on an
electric vehicle cooling system, in which case you don't need a
working temperature for the magnet of say, 180°C, but you
could maybe live with 150 or even lower.
That's the application research. We must not forget that the
Western automotive manufacturers likes things cheap.
The neodymium magnet is the most energy efficient and powerful
and lightweight magnet that we know.
And but you know, do we? Do we need passenger vehicles
with 400 horsepowers that accelerate from zero to 100
kilometers an hour and 3 seconds in on our highways and in our
congested cities. I mean, I had a car in Toronto,
you know, jogging was faster, so to say.
There are alternative motors, say magnet based ones, or you
look at BMW, they who build a complete powertrain.
All this is possible. Of course, then defenders of
NDFEB and of top performance will say, oh, but then the
battery, then you don't get a range of 800 kilometers, you
only get 600 kilometers. Who cares?
Seriously, battery technology is moving on.
We are going to see the solid-state battery with a range
of 1100 kilometers given an NDF EB motor.
If it then with ferrite motor only delivers 700 kilometers,
who cares? Yeah, OK.
You've had a long time view on backing the incumbent.
I'm curious to hear you're somewhat in enthusiasm from an
equity perspective on the ION, except have your rules changed?
So let's get back over the rules quickly.
So back the incumbents, barriers to entry far too high capital
cost, operating cost, economic returns or no go #2 never go
full retard. Stay upstream.
You go from a mine to a concentrate, maybe a carbonite.
And that way you're probably going to just do a Forrest Gump
or arraignment like to go any further downstream into
separated oxides through through corn, mixed carbonite, crack it,
separate it. That's to go full retard.
That's like I am Sam, simple Jack, simple Jack.
So very, very sort of precise focus on the strategy, low shape
and the test work. Final element.
If we do start straying into large scale separation tech, you
need the explicit backing of a state.
So what we've seen with Iluka coming in being backed by
Australia was I by the US What Linus did had with the Japanese,
that sort of equivalent sort of backing.
So the strategies I thought were appealing around Clay's remained
relatively positive. I think everything was hinging
on this. Sarah Verde getting up.
And the trouble that we just discussed briefly before
indicates that, well, the problems are perhaps more than
we thought. And if it's a black box and no
news is getting out, and I think Thomas has put out a couple of
posts citing the fact that they've had some straggly export
trade data come out that indicates that it's perhaps not
working well. Maybe the test work wasn't done
enough. Maybe it was forced at the wrong
time and by a private equity group that perhaps wasn't
necessarily focused on the problems on the ground with
solving that need to happen on the flow sheet.
In my mind, I find it very hard to get constructive on other
types of development plays in the equity space.
I think Brazilian rare earths and what they're doing or
perhaps what they've got with this high grade high radium, you
know, high grade cool was a treo values of over 10 percent 4000
PPM uranium. That's something different.
That's interesting. That's high in assigned
material, but obviously there's the problems of the flow sheet.
So in my mind, Mei VMM, they still have a strategic appeal in
terms of that potential sort of disruption concept.
But I think Thomas is making some good points there around
rehab treatment properly. And I think some of our recent
technical discussions or deeper dives there have indicated that
we've perhaps simplified the radionuclide issues to a point
where we're overlooking 5 mega problems.
Like the chemistry set in these things is unbelievably
complicated no matter which set you look at.
Clays are something different. Only a couple of stages, basic
bleaching, but every time I've looked at project, the closer
you dig, the more convoluted and complex it becomes.
So I think in my mind you're still backing the incumbents.
And I say smaller, isolated exposure to those that can
disrupt the market through conventional simple means
finally going upstream, focusing on those names.
I found that point on Sierra Verde interesting.
JD Like what? What?
Maybe some work wasn't done properly to understand things
when you were doing the work to put it all together.
Maybe things were you know what, what is that a function of the
amount of drilling that was done?
Is that a function of the sample management?
Because you know what sorts out both of those things?
Poking a few holes in mate. Really drilling.
And if you are going to drill, mate, there's only one team to
go with the mighty K Drill. K drill mate.
Doesn't matter if there's a few exploration holes or a multi
year program to prove it up, they'll look after you.
And like you were saying, mate, not just a matter of punching in
the meters, right? You want to get it done safely
and you want to get it done productively.
No downtime, no dramas, no hassle.
A drill. You want productive drilling,
You want sampling. Sample matters, mate.
It's got to be reliable, clean, accurate, no contamination.
You've got to be able to trust the numbers.
And last but not least, mate, the team has got decades of
years of experience. They'll mobilize quickly and
they'll just get the job done. Doesn't matter where in the
state they are, they get the job done.
Yeah, it doesn't matter the type of drilling, they find a way.
It's just simple as that. Go K drill.
Look at the market caps of Linus and MP and what like the Linus
is like a $9 billion Australian company now and doesn't make
money. Like top line revenue in the
entire like between MP and Linus is like 550 million last
quarter. And look at the collective
market cap of those two companies, it's enormous.
So the equity valuations are biking in much, much, much
higher prices. Is it realistic to think that
way about the future? I suppose it's more of a
discussion for the team here. Look, in my mind, businesses
like this, it's not a producing A commodity, it's producing
specialty chemical product. They can do so at high margin to
a very grateful customer base that's got some sort of
certainty for an external supply chain.
It's hard to do berries the most enormous.
They probably should be trading at something like uranium,
chemical kind of multiple. I don't necessarily think about
this in terms of like an NNDPR function, but you've got to
value these guys somehow on a commodity price in the future.
But this is a very complicated product.
It's a wrap your head around in terms of the supply and demand
function and what's going on in China.
So all I'll say and I'll lead into what's the colleagues here
in my mind. Yes, prices need to rise what
threefold in order to get to incentive levels for Western
developers. But what's missing from that
discussion is what cost of production is for an upstart in
the developing world, and their cost of production and their
cost of capital. In my mind, there's a lot of
supply that can come on. As we know it's pretty abundant
in the Earth's crust. If there's a simple processing
mechanism that can be tapped, we've got to be thinking about
this alongside an existing cost of production competition.
Yeah, those are very interesting points.
You make that and I totally agree also to your point of
investing upstream to the concentrated carbonate level, I
totally agree there, especially when you're producing
concentrate. We see so many miners who just
feel at the PA studies for the concentrate.
So did it decide to go to carbonate?
But the funny fact is carbonate, it's a 0% margin value add
there. It's not making any money.
It's even just inflating your CapEx and your ability to get
this mine online. I actually do take the
counterpoint there. I think there's a lot of supply
that might come online in the next few years.
In the short term, three to five years, I have quite some
confidence in Energy Fuels. The main costs the structure in
producing oxide is to concentrate itself.
What Energy Fuels are doing very smartly is they're sourcing
their monocyte byproducts from their heavy mineral sense.
So they can probably source it like have to concentrate cost of
other producers, which gives them some flexibility for their
extraction circuits and oxide production there to do it at low
cost. Also on Brazilian records, I'm
finding these guys pretty interesting.
I do agree that the flow sheet, it's probably more complex than
what we've seen to date. In many miners they find this
new mineral face, it's called Chefkinites.
We haven't seen this on a commercial scale to date in the
industry, but actually published today some pretty interesting
metallurgy results in their AMREC.
So they're producing a clean AMREC just with direct leaching
of their ore, which is interesting.
I do agree, like from a capital term perspective, almost none of
these miners are going to make it.
Like let's look back at the last 20 years, we've seen an MP
resort, we've seen Mount Wealth come into production and 0
further. That's three mines in 20 years.
How many juniors are there out there?
Probably 100. So you're really looking for
these juniors. If you're looking at hard work,
you're looking at like a high startup PF high grades, probably
15% trio, somewhere, somewhere around that range if you want to
have capital payback and then you can go lower.
But let's realize that MP, it's like 6% trio, which is already
loss making. So that's probably your lower
boundary there. I think, if I may say, why did
Linus work? Because of course they have a
very, very patient financier who also had to rescue them in
between. And the more important thing,
they had a ready market, Japan. Japan is the only functioning
rare earth market outside China. The rest of us are only extras
basically. So Linus had the support from
Japan, from the Japan non government entity that is very
governmental and the Japanese market that is very, very
important. This is how they could grow MP
materials and my opinion they could reopen the mind because
the Chinese shareholder offered them the market to sell the
concentrate. MP were making money until they
started fiddling around with things trying to reduce a
separation process and separate NDPR and probably also some guns
on cerium. And that that I think is where
the misery started because see, liners now want to increase
product capacity and but already now where does the NDPR go?
Japan has a market of 5200 tons of neodymium and NDPR per year.
So where does the rest go? China and then they conveniently
stop separating at the promethium gap.
So they have the so-called SEGH, which is some arium, erbium,
gadolinium and holmium which the concentrate of which they sent
to China. And they they can be so grateful
that China is taking it. And, you know, then then this me
too company called Brazilian Rare Earths.
Yeah. They go and say, oh, produce a
carbonate that is marketable. Marketable to whom?
Please, who will buy this? Yeah.
And then we will also have an seg that will find a ready
market where please, you know, assuming that China will forever
be the trash can for junior rare earth minor concepts.
You know, I would not be so sure where what we are looking at in
the current politics may well be China getting selective on what
it buys from whom. Previously China was not
interested in what rare earths was produced from imported rare
earths raw materials. Since this year it is.
So everything falls on the quota.
And then they've clearly shown that they may become selective
because the Malaysian government has been asking China for rare
earth technology for years for licensing.
So ahead of XI Jinping's recent visit, licenses were prepared
for the in situ leaching and the carbonate production from IAC
deposits. A week before Xi Jinping went to
Malaysia, these licenses were ready to be sent.
But this is something that the miners of Malaysia already have.
They have the Chinese workers there.
They have the experts, They have the geologists, the geochemists.
Everything is there. They didn't need this.
But the Malaysian government, of course, didn't know.
So they were really, really grateful about these licenses.
Yeah, but China has absolutely no intention to go beyond that.
One thing I'd like to remark with regard to carbonate also
there's a very clearly visible trend that instead of shipping a
comparatively low price carbonate Myanmar laws and also
recently Malaysia actually shipped mixtures oxides.
So after calcination, basically the the difference is you do not
the end user does not need to calcinate anymore and can
probably go directly into the solvent extract.
So this increases also the number of customers.
So anyway, but you know, I think we we have to slowly get used to
a situation where China is not available anymore to take junior
minor raw materials and that we are stuck with do it And then we
also have to look at, you know, producing market etiquette
quantities. It doesn't help you if you have
a gigantic separation facility, if only for a fraction.
You have a market domestically and need to export the rest
against China. You know, So I think we need a
complete rethink. Isn't that kind of perplexing
then? If we all kind of agree that the
equity case for almost every opportunity is dismal, isn't
perplexing how much brainpower we all put into this specialty
commodity? Matt I mean, ever spend any time
looking at some of the detailed financials about how much mining
companies actually make? That's a very good point.
And I mean, what's also interesting is when we look at
all these juniors, they're all bodies, they're MP studies, you,
you name it. Like you say, it's dismissal,
like almost none of these can ever make money.
But I think something we have to accept is look at MP, look at
Linus, they traded like 5 times their MPP.
Like that's just marked reality. So it's very risky to invest in
a junior based on the perception that after once you start
producing, it's going to rewrite to such an level.
But it's something we have to keep in mind.
But basically, if you're still a junior, you know it on an NFV
basis, it's very risky. And none of these juniors are,
except a couple in my mind are interesting to look at.
We are. Also a little bit unfair.
And our western civilized nations completely lack the
value chain of rare earths. So for junior miners to show
something that is interesting, they have to get into something
that they are actually not experts in and can never be.
For a miner, he's turning out a concentrate.
That's it. He's not supposed to produce in
the Feb magnet. The networking capital will
crush him. Forget it.
It just doesn't work. Or have you ever heard of an
iron ore miner who's producing precision steel tubes?
Yeah. So this would be the equivalent.
So it's maybe the expectation level is too high.
What I would recommend is having a really, really close look how
the value chain is structured in China, which is everyone is a
specialist in his particular part of the value chain.
And these are companies that are independent, that they have
their own profit loss and balance sheet to make sure that
at every step of the chain there's at least break even.
And at every step of the chain you have your own imbalances in
rare earth. So if you try to bring that
under one roof, you will create one big mess.
Keep it separate. One specialist, one specialist,
11 specialist do not force you junior miners to to produce
something they have no clue about.
It's not fair. Mine to magnet.
The. Admission of the junior miner
isn't even a miner yet. But that's that's super special
retard. In that case, that's like, yeah,
oxides is one thing, metal, then the magnets.
No, that's that's Brian dead. So this this is like a
pregnancy, you know, at the beginning, in months 1 you, you
produce some ore and probably nine months later, you know, you
will finally produce some marketable product in form of a
separated material. Not good.
And I think that's unfair because it also drives the
capital requirements through the roof and all that.
The approach of U core is actually quite OK.
Unfortunately, they have a process there which probably
doesn't work because, I mean, the masters of grand, the grand
masters of rare earths and China have given up on a similar
process already in 2011. But this is actually the correct
approach. And some private companies,
particularly in the US and Europe, who also say, no, no,
no, we don't do any mining. We do the separation.
That's our job. And then LCM come in, metal
maker, metal expert, nobody will challenge them because they are
the guys who know how to do this.
Yeah. And the same goes further
downstream than, for example, for the magnet makers.
Thomas, what are we, what are we to make of?
I mean, you talked about like why was Lana successful?
They had the market before the selling.
We live in a time now where, you know, a project like any other
is, is, is getting financed. There's no market for that
product. So now the government's coming
in and that will be the market. They'll buy the product.
Like what? What are we going to make of
that? Like which?
Project. I look as any other.
Oh. Yeah.
OK. Australia, my primitive view is
you can already not profitably mine nickel in Australia.
What makes you think that will be any better?
So I really think that the capital expenditure amounts that
are put out there for these projects in general are way too
high. I mean even heavy mineral sense,
you know, the amounts are just flabbergasting this, this
doesn't fly. I think that it's more of a
general problem in Australia. Yeah.
And $2 billion for the separation of Monazite is?
If we're lucky. Brilliant dollars, of course,
but this is It's too much. It cannot.
It cannot be cannot work. What do you make of the current
status of geopolitical dynamics? With rare earth being this real
point of leverage? Do we expect any change here?
Do we think things will ease on any of the fronts in that
respect, or do you think this is the new status quo?
The capacities in China are gigantic.
You have basically 3 dominant rare earth compound
manufacturers plus about several dozens of independents and the
I, I don't want to be too specific, but I think the, the
base capacity for separation in China is 510,000 tons and then
you have a as permanent magnet capacity that is above 600,000
tons already. Last year the utilization rate
in as permanent magnets in China was barely 60%.
I've done metal business for about 20 years and in my
opinion, any utilization rate below 70% and you start writing
losses. You know, with this in the
background, I completely fail in understanding how China wants to
hamper exports. As I mentioned, last year they
exported 58,147 tons of rare earths, permanent magnets to 130
countries. This is an enormously dominant
position and now they force practically the main players to
have their own supply. Where does this leave China's
monopoly? Where does this leave the
advances that they made? It will all come to nothing.
We must hear the explosions and we must do something.
So and I think in, in terms of of EU, the idea with Solvay and
Carrister is nice, but we have to address the issue of
processing primary raw materials in the EU with the resulting
radioactive waste. This must come onto the table.
This is the problem of the origin countries.
You cannot do that. This is not OK.
If you want to benefit from the added value, you also have to
deal with the problems. And don't forget all of them
signed on to the Treaty of Nuclear Non Proliferation, the
NPT. There are accession protocols
where there are quantities inside which define how much
radioactive material you can produce a year, and all of them
will exceed them. So the IAEA would need to be
involved if you want to leave it in the countries of origin.
So I think there we should be more forthcoming and honest.
No, I totally agree there. And I think that's a very big
advantage to China as China is a country lead by engineers, by
smart people who see this as it is.
We also tend to be very emotional in that sense.
I guess radioactive is bad stuff.
It is bad, but if you handle it in a proper way, it's effects
can be mitigated very efficiently.
And if you want to produce anything of volume in the in the
West, we need to deal with this stuff.
We need to deal with thorium a place or relatively low on
dorium, but any hard projects that's the best inside will be
high in dorium. You can produce a relatively
clean dorium concentrate. You can put it back back in the
pit. There are multiple solutions
there. We need to address this if you
want to make have a chance as a Western supply chain.
I think for me Axel's being a bit dismissive of the sector in
terms of its ability to generate cash.
In my mind it's very simple for us to over simplify what's going
on here. If we've learned anything from
the last 30 years of BHP in Rio eliminating the downstream, it's
always to focus on what we can do best, focus on the upstream.
We're a country or in this part of the world or probably
markets. We're a digging ship economy.
We're still pushing product offshore.
So I think to do the advanced chemical engineering takes a
different set of skills and a different set of knowledge to be
able to navigate how to do this in an economic way.
In my mind, I'm still still find it fascinating.
I still think there's a lot of alpha to be found.
But understanding the chemistry and the complexity of these flow
sheets and the permitting, I think there's a lot more work
still to be done. But I'm still enjoying it, and
particularly enjoying talking about it with these two gents.
Is there any like market activity we can anticipate just
like you guys have any theories about deals in the space that
makes sense or likely? Can we go back to that?
It was only very small news blip, but Linus and MP possibly
coming together. It's old news, but I always
liked the notion that if we're going to compete with China in
any way, shape or form you're doing, you're better off doing
this together. Consolidating rest of world
supply. I think strategically and from a
marketing perspective makes a lot of sense.
Not that I know anything in particular, but that's something
that's rattling around in the back of my head and the ability
to grow in with manufacturing, reassuring, reassuring going on.
I think that opens up several possibilities.
So in my mind, that's something I'm keeping a close eye on.
I'm also keeping an eye on what's happening with Ilooka in
terms of third party feedstock. That's something that continues
to burn in the back of my mind and what opportunities that may
open up, whether it's for an NTU, there's some development
company or development projects that look pretty good on face
value that might be coming in into the space.
We still need to see how they're going to get a price that's
going to justify the investment. So coming back to that point
around price bifurcation, which I think is a bit of a fantasy,
maybe we do not need to start seeing what we what happened in
the US, whereby correct me if I'm wrong here, Thomas, but
there was some sort of domestic incentive price or floor price
given to US producers of a domestically manufactured magnet
was a $25 or $30.00 US relative to the Chinese price at the
time, which was something around 20.
If you produce it in the US, there's a $5, there's a $5 head
start. That type of mechanism I thought
was really interesting and might lead the way in terms of getting
us to figure this out on the downstream economic side of
things, how this should work and also free open checkbook from
the Australian government or the US also helps.
Excellent guys. Thank you so much for sharing
your insights. This has been just awesome.
Truly grateful for the shared expertise of the three of you.
It's been an absolute delight. So thanks so much guys.
Cheers. Yes, thank.
You thanks. How good was that?
I think we've got some partners to thank after that absolutely
ripping conversation, JD. Hi, after that ripping
conversation, we've got some ripping partners to thank.
A big thank you to Mineral Mining Services.
Grounded Sandy Ground Support Cage drill cross Boundary Energy
Go. To Roke, go to Roke.
Now remember, I'm an idiot. JD is an idiot.
If you thought any of this was anything other than
entertainment, you're an idiot and you need to read out a
disclaimer.