Lifton on asteroid mining rare earths and Molycorp’s Mountain Pass – by Jack Lifton (Investor Intel – July 20, 2015)

http://investorintel.com/

Some rules don’t change. But that doesn’t mean that our poorly educated journalists have to know of them or even have to understand them, when they are described or applied. One rule, frequently swept under the rug by junior mining promoters eager to take advantage of journalistic ignorance can be stated as:

“In order for any deposit to be developed into a profitable mine the infrastructure to access it must already exist, or, if not, then its costs must be included in the feasibility study.”

Trivially this means for example no commercial mining until I can get to the deposit and either process the material to a commercial form at the site or move it to a processing site without logistics’ costs destroying the project economics.

A corollary of the above “rule” is that the cost of infrastructure must be quantified and covered before the project enters development. Now, the above rules of economics having been stated let’s get to what I am talking about today.

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Time to Tackle Rare Earth’s Toxic Underbelly – by Matthew J. Kiernan (Huffington Post – July 9, 2015)

http://www.huffingtonpost.com/business/

Matthew J. Kiernan is the Founder and Chief Executive of Inflection Point Capital Management

On April 2, 2015, the BBC ran an investigative report that illustrated rare earth mining’s trail of destruction. Whilst it was not the first time that the toxicity of rare earth mining had been the subject of scrutiny, the graphic portrayal of a man-made toxic lake on the outskirts of Baotou in Mongolia, should be a wake-up call for consumers of digital TVs, computers and smart phones, which are the major users of rare earth elements.

BBC’s piece was written by Tim Maughan, who had received support from Unknown Fields Division, an NGO that has a track record of going to the farthest flung regions of the world to uncover hidden secrets. It is estimated that Baotou is the centre of production of half of China’s rare earth elements, with one tonne of rare earth elements producing 2,000 tonnes of toxic waste.

Baotou’s toxic lake raises the important question; how is that such important commodities continue to be mined with such low environmental standards? Rare earth mining has long been dominated by China, which up until recently produced over 90 percent of global production.

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Fate of global rare earth miners rests on China smuggling crackdown – by David Stanway (Reuters U.S. – July 7, 2015)

http://www.reuters.com/

BEIJING – The fate of debt-ridden U.S. rare earth miner Molycorp rests on China’s efforts to crack down on networks that smuggled as much as 40,000 tonnes of the vital technology metals out of the country last year, driving down global prices.

Greenwood, Colorado-based Molycorp is the sole U.S. domestic supplier of rare earths used in everything from smartphones to military jet engines and hybrid vehicles. In 2011, it relaunched its huge Mountain Pass mine in California expecting prices to stay high after China, which dominates world supply, restricted exports. Last month it filed for bankruptcy protection as operating losses mounted.

Customs police in the eastern Chinese port of Qingdao last month arrested five traders following a nine-month investigation into a rare earth and ferromolybdenum smuggling ring worth nearly $18 million.

That was no one-off. Chinese authorities have been struggling since 2010 to smash an illegal supply chain in which rogue miners deliver ores to unauthorized separation facilities, with the finished products then disguised and shipped abroad.

“Traders go through all kinds of channels and make false product declarations at customs – marking it as alumina or even washing powder,” said Chen Zhanheng, vice-secretary general of the Association of China Rare Earth Industry.

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Avalon banks on new ‘blood metals’ rule for Canada’s tin mine success – by Cecilia Jamasmie (Mining.com – June 30, 2015)

http://www.mining.com/

Canada’s Avalon Rare Metals (TSX:AVL), until now mostly known for its incursion in the rare earths market, is proceeding with a $1.3 million work program in South-western Nova Scotia to reopen a historic tin-indium mine.

The company, working on completing a Preliminary Economic Assessment (“PEA”) for the project by November this year, is betting on recently approved legislation in Europe, which bans all products containing conflict minerals from war zones in Africa.

Speaking at the 128th Annual Meeting of The Nova Scotia Mining Society late in June, Avalon’s President and CEO Don Bubar said the European Union anti “blood metals” rules, together with the U.S. Dodd-Frank Act, which forces US stock exchange-listed companies to disclose the use of minerals from a conflict zone in their supply chains, gives Avalon’s tin project huge advantages.

The miner was granted a special exploration licence to search 22 claims totalling 356.12 hectares. It also received a $40,000 project grant from the province earlier this year to assist with test drilling.

“We’re hopeful, at this point,” Natural Resources Minister Zach Churchill told MINING.com in an interview mid-June, adding that since market prices for tin have improved, the Nova Scotia government is optimistic about the prospects at the location.

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Molycorp Files for Bankruptcy Protection – by John W. Miller and Anjie Zheng (Wall Street Journal – June 25, 2015)

http://www.wsj.com/

Rare-earths miner reaches agreement with major creditors to restructure its $1.7 billion debt load

Molycorp Inc. filed for bankruptcy protection on Thursday, becoming the biggest corporate failure in a bleak year for a mining industry hit by slumping commodity prices and waning demand from its biggest customer, China.

The Greenwood Village, Colo., company, the sole U.S. miner and producer of rare earth elements, said it had secured an agreement with creditors to restructure its $1.7 billion in debt, and obtained $225 million in new financing to continue operations. It expects to have a court-approved restructuring plan by the end of the year.

The filing marks a sharp reversal of fortunes for a company that rode a boom in rare earths, amid a broader surge in commodities prices. Fueled by restrictions on exports of rare earths by China, the world’s dominant supplier, Molycorp’s market value rocketed to over $6 billion five years ago.

But China then relaxed its rules, and battery and magnet makers found alternatives to rare earths, sending Molycorp into a long slide. It hasn’t turned a profit since 2011. 

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The darker side of solar power – by Konrad Yakabuski (Globe and Mail – May 28, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

The Saudi Arabian oil minister’s recent comment that the world’s largest petroleum producer sees a postfossil-fuel world in which his country becomes a solar-power superpower must have comforted climate activists that even the worst offenders can come around. After all, what could be more redemptive than turning abandoned oil fields into solar farms?

Solar power’s image as “clean” and “limitless” has led princes and politicians alike to dole out huge subsidies to bask in its glow. Under the 2009 Green Energy Act, Ontario agreed to pay solar power operators as much as 10 times the market rate for the electricity they produce under 20-year contracts.

Not satisfied with risk-free deals that will make many solar players rich at consumers’ expense, Ontario’s solar industry is now lobbying for even more. And it’s leveraging solar’s apple-pie image to press politicians into giving it what it wants.

On Tuesday, the Canadian Solar Industries Association (CanSIA) released a poll purporting to show that three-quarters of Ontarians “would like to see the government invest more in solar powered electricity and in technologies that enable solar power.”

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Mining Investments in Chile to Soar Over the Next Decade – by Anne Lu (International Business Times – June 11 2015)

http://www.ibtimes.com.au/

Chile will continue to be the most attractive Latin American country to foreign mining investors, as mining investments in the country are expected to reach a value of about US$64 billion [$82 billion] by 2025, said state copper commission Cochilco.

Cochilco head Alex Matute Johns noted that Chile’s copper output is expected to jump up to around eight million tons per year by 2025. He also predicted that foreign investments would soar from US$23 billion last year to about US$28 billion by 2017. State-owned copper giant Codelco is expected to carry out 47 percent of Chile’s portfolio of planned mining investments.

But aside from copper, Chile is also a top producer of titanium, with the likes of White Mountain Titanium Corporation (OTCQB: WMTM) operating in northern Chile’s Atacama region. Its flagship Cerro Blanco project currently consists of 41 registered mining exploitation concessions and 34 mining exploration concessions over approximately 17,041 hectares of mineral sand. As of March 2015, nine prospects have been identified along a four-kilometre strike length, with an estimated rutile resource of 112 million tonnes at 1.73 percent titanium dioxide and 69 million tonnes at 1.37 percent titanium dioxide.

Another Chilean mining company, Mineria Activa, aims to develop Chile’s rare earth minerals market based on a recent survey that showed that there are major concentrations of neodymium and dysprosium south of Chile’s capital, Santiago.

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The uncomfortable choice with solar power and raw material sourcing – by Chris Berry (PV-Tech.com – June 8, 2015)

http://www.pv-tech.org/

Chris is a well-known writer, speaker, and analyst. He is the co-author of The Disruptive Discoveries Journal (www.discoveryinvesting.com) and focuses much of his time on energy metals – those metals or minerals used in the generation or storage of energy.

Despite the hope and promise that solar power holds out as a cleaner source of long-term electricity generation, it is not without its problems. As the price of solar power continues to fall based on increased scale of production and innovation, these advances are underpinned by something often overlooked – a reliable source of raw materials.

When you’re using your computer or phone, do you ever stop and think about the source of the minerals and materials which provide the technology we often take for granted? So it is with solar power.

Every day we open the newspaper and read an article about another consumer or business adopting solar technology based on increasingly competitive economics. But how are these economics achieved? This is an often overlooked question and has recently become more important.

In recent years, China, the “workshop of the world”, has offered low labour costs (though this is changing) and raw materials for high-value products have been sourced from Asia and Africa, in particular – areas with relatively lax environmental standards.

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Chileans Bet Apple Will Pay a Premium for Clean Rare Earths – by Eduardo Thomson (Bloomberg News – June 2, 2015)

http://www.bloomberg.com/

The future of rare-earth minerals used in everything from iPhones to Tomahawk missiles lies under the pine plantations of southern Chile, and in a secret formula, according to closely held junior miner Mineria Activa.

Elements such as neodymium and dysprosium are contained in clays near the city of Concepcion in concentrations similar to those found in southern China, which has all but cornered global supply until now. The similarities end there, Arturo Albornoz, who heads Activa’s Biolantanidos project, said in an interview.

While operations in China typically pump ammonium sulfate into the ground and wait for the chemical to seep out with the minerals, at Biolantanidos the plan is to dig out the clay, put it through a tank-leaching process with biodegradable chemicals and return it cleaned to the ground, replanting pine and eucalyptus trees.

It may be laborious, but Albornoz is hoping companies such as ThyssenKrupp AG, Apple Inc. and Tomahawk cruise missile maker Raytheon Co. will end up paying a premium, knowing their suppliers aren’t destroying the planet.

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Lifton says forget the Wall Street Journal on rare earths. – by Jack Lifton (InvestorIntel.com – June 1, 2015)

http://investorintel.com/

Yesterday’s (May 31’s) Wall Street Journal had a really poor article about the impending fate of Molycorp, bankruptcy from failure to meet payment on debts, as it reflects, in the WSJ’s opinion, the rare earth market(s).

The rare earth share market “mania” that began in the USA in 2007 when a group of funds and an entrepreneur bought the defunct, moribund, and on “care and maintenance” Molycorp from Chevron with the stated purpose of bringing it back into production was an attempt to “get ahead” of the “market” as then perceived by this group.

This original core group of Molycorp investors had noted that a rapidly growing demand for the rare earths in high tech consumer goods was going to have to depend on the tumultuous but unpredictable (with regard to the impact of governance by the state as well as private interests) Chinese domestic economy, because at that time (as it remains today) China was the overwhelmingly largest producer of the rare earths.

Today Molycorp has failed as a business even though it has raised and spent between 2 and 3 billion dollars to re-start its California mine and base-level separation facility.

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Molycorp Struggles to Survive Rare-Earths Bubble – by John W. Miller (Wall Street Journal – May 31, 2015)

http://www.wsj.com/

U.S. rare-earths miner is expected to skip loan payment, which could lead to bankruptcy filing

MOUNTAIN PASS, Calif.—In the dusty mountains of the California-Nevada border, 4,800 feet above sea level, the U.S.’s only miner and processor of rare-earths elements is struggling to squeeze a profit out of its small open-pit mine and plant.

On Monday, Molycorp Inc. said it would skip a $32.5 million loan payment, triggering a 30-day grace period that could lead to a bankruptcy filing before the end of June.

The company is trying to survive one of the biggest commodity bubbles in economic history. Five years ago, export restrictions by China, the world’s dominant supplier, and a global political spat inflated the value of rare earths—15 elements used as niche ingredients in magnets, batteries, catalytic converters and other high-tech products—and propelled Molycorp’s stock-market value to over $6 billion.

Since then, rare-earths prices have been on a long slide downward. Now with a market capitalization of around $150 million, Molycorp is indebted and unprofitable. Customers are putting in orders, but the company hasn’t met production targets at Mountain Pass, and is in restructuring talks with firms representing its creditors.

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Got copper? New pentagon report spotlights key role of critical metals – by Daniel McGroarty (The Hill – April 12, 2015)

http://thehill.com/

A new national security report has just been released: The 2015 National Defense Stockpile Requirements Report documents projected shortfalls in various metals, minerals and materials required for the U.S. defense industrial base and, in this day of dual-use technologies, the “essential civilian economy.”

In all, the new report details shortfalls that, in classified crises scenarios, would affect 30 metals and minerals – about 1/3 of the naturally occurring elements in the Periodic Table. Many of the metals and minerals used in U.S. defense applications aren’t exactly household names. There’s bismuth, used in defense thermo-electrics to capture ‘waste heat” and channel it back into weapons systems power sources. Weapons builders need iridium – used in aircraft engines, satellites and rocket propulsion– as an alternative to America’s present reliance on Russian supply.

In the case of tellurium, used in thermal imaging and navigation systems, present tellurium production, already sharply limited, will soon drop to zero, increasing U.S. dependency on China, Russia and Japan. Rhenium and molybdenum are essential to high-performance alloys used in jet turbines and other defense systems – as is more cobalt, used in jet engine super-alloys and samarium-cobalt permanent magnets. As the Pentagon study notes:

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What 60 Minutes Got Wrong About Rare Earths And China – by Tim Worstall (Forbes Magazine – March 23, 2015)

 

http://www.forbes.com/

Last night 60 Minutes ran a segment on how American industry, and more importantly, the American defense industry, is prostrate before a Chinese monopoly of rare earths production. This is of course very worrying for all sorts of Very Serious People and something no doubt should be done.

There is a slight problem with the analysis 60 Minutes presented though: that problem being that their analysis was wrong. And I say this as someone who works in that rare earth industry, someone who has, at times, been a near monopoly supplier of one of the rare earths and, even, a supplier to the US defense industry of non-Chinese rare earths.

Here are the most important lines in the 60 Minutes report:

But trouble is once again looming for the U.S. rare earth industry. Since restarting operations two years ago, Molycorp’s mountain pass mine has yet to turn a profit, and so deeply in debt that just last week, its own auditor warned it may not be able to stay in business.

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Molycorp Inc at risk of financial collapse, signalling fall of rare earth industry – by Peter Koven (National Post – March 18, 2015)

The National Post is Canada’s second largest national paper.

North America’s flagship rare earth mining company is at risk of collapse, a symbol of how far the entire industry has fallen from its highs a few years ago.

Molycorp Inc. warned on Monday night that it may not be able to continue as a going concern if it can’t fix its balance sheet. The Colorado-based company has US$1.7 billion of debt, including US$206.5 million of convertible notes that mature in June of 2016. It is bleeding cash from operations and is not in a position to meet its future obligations. Its cash position was down to US$212 million at the end of December.

“We are focused on this issue and have retained financial and other advisers to assist us in strengthening our current financial position,” chief financial officer Michael Doolan said on a conference call.

The stock plunged 35% on Tuesday to close at just US48¢, giving Molycorp a market value of US$117 million. It is a stunning fall for a company that was worth almost US$80 a share at its peak in 2011, and acquired Canadian firm Neo Material Technologies Inc. for US$1.3 billion.

Molycorp went public in 2010, a period when prices for rare earth metals like dysprosium and neodymium were sky high.

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The supermaterial that could launch a revolution – by Joseph Hall (Toronto Star – February 7, 2015)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Graphene, a material that can be derived from the lead in an ordinary pencil, is on the cusp of transforming everything from touchscreens to tennis rackets.

In a lab off of a shaft-like corridor below the University of Toronto’s old Lassonde Mining Building, PhD student Changhong Cao is employing some strikingly humble equipment: Scotch Tape.

Surrounded by a nuclear microscope and high-powered computers, the mechanical engineer uses the Christmas wrapping staple to peel off the top layers from a square of graphite the size of a Scrabble tile.

That’s the same sort of carbon-based graphite at the centre of every ordinary pencil you’ve ever used. Then, repeatedly folding fresh segments of the tape over the captured graphite smudge, Cao peels off more and more of the carbon layers originally deposited on the sticky surface.

The resulting material — known as graphene — is the strongest on Earth and may now be on the cusp of transforming the world.

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