“The often overlooked or ignored details surrounding Rare Earths.”

By RPaul, September 29, 2011

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

Having worked on a very detailed project covering Rare Earth deposits, production, manufacture, and end use for over two years, I am amazed at the touts who pitch various companies associated with Rare Earths as the next big investment opportunity. There are a number of reasons why the companies they mention by name will have a very difficult time ever turning a resemblance of a profit. Let me begin with just a few basic premises in this post (which I hope to develop into a series of topics related to Rare Earth) that are somehow being completed ignored by the touts, but hopefully will not be overlooked by investors.

–Not all Rare Earth Elements are created equal. There are 17 Rare Earth Elements (REE) in the periodic table; 15 lanthanides (elements 57-71) plus scandium and yttrium (21 and 39), which are included because they are very often found in the same mineral deposits. Each has different chemical properties. Typically, REE are in one of two groups, Light or Heavy. Lanthanum and Cerium are Light REE used to make refractive glass, battery electrode, camera lenses and as fluid cracking catalysts by oil refineries. Neodymium and Samarium, also Light REE, are used to make permanent magnets. Heavy REE, such as Gadolinium, Dysprosium and Erbium are of prized interest for their uses in specialized magnets, lasers, and phosphors. Because of their unique properties and uses, Heavy REE are very desirable. There are also found in the smallest quantities, some not all in every deposit.

–Not all Rare Earth Mineral Deposits are created equal. It shouldn’t be a surprise to anyone that individual deposits of rare-containing minerals hold vastly different amounts of each of the 17 elements. With the exception of the Ion Absorption Clay Chinese mineral deposits known as the South China Clays, which are almost exclusively heavy REE, all other deposits have not only far more of the Light elements, but very little of the most desirable heavies. In addition to the actual rare earth element content of various deposits, there are differences in the minerals in those deposits that contain the rare earth elements themselves. Monazite, the most common rare earth containing mineral in the United States can contain anywhere from 6% on up of Thorium, a radioactive element that must be handled, and somehow disposed of, during the initial concentration phase of the separation process. The major deposit in Australia, at Mt. Weld, is actually a super-gene monazite, which not only has a relatively high thorium content but also is more difficult to separate owing to the stronger molecular bond. The majority of identified deposits in Canada are silicates, which have molecular bonds that are even more difficult to separate. The monazite deposit in South Africa has such a high radioactive thorium content, up to 18%, that workers in the planned open pit mine will not be able to work more than 2-hr shifts due to radiation concerns. Contrasted, outside of the ion adsorption clays in southern China, the primary rare earth containing mineral in China is Bastaesite, which contains no radioactive elements and as a result, tailings from the phase 1 concentration are easier to handle.

So, the first questions one need to ask when researching these touted companies are: What is the base mineral of your deposit and how does it assay (light versus heavy). If Monazite, the typical Monazite-CE ore contains 45-48% cerium, approximately 24% lanthanum, about 17% neodymium, 5% praseodymium, and minor quantities of samarium, gadolinium, and yttrium. If a company has a monazite mineral deposit, for example, and it assays at .05 praseodymium, that company will need to mine 20 metric tons of ore to end up with 1 ton of praseodymium. Not bad you say. What if that deposit assays at .001 for Yttrium (a very desirable element for use in military lasers). Now, the company needs to mine 1000 tons of ore for 1 ton of Yttrium. At a conservative average of 6-12% thorium content for Monazite ores, you will also have 60 to 120 tons of a radioactive material (thorium) as a bonus to do something with. Permitting for ordinary mine tailings disposal (gold/silver) is difficult enough but disposing of radioactive materials is a whole different adventure. The super-gene monazite deposit at Mt. Weld Australia is another story by itself. The company working this deposit must transport the ore 1,000 km to the port of Perth. A separate facility had to be built because of the high radioactive content (Thorium). Then the ore is shipped an additional 2,000 km to Malaysia for processing. Here is where it gets interesting. The firm indeed obtained a permit to build the processing facility (over the protests of locals who remember the last time this processing was done in Malaysia by the Japanese.) BUT, has yet to obtain a permit to operate the facility. So just how much processing will be done this year???

Moving along, how (and where) do these companies plan to concentrate and separate the individual elements? Currently there are ZERO facilities in the United States, Canada, Australia (hence shipment to Malaysia), Europe, or South America to chemically separate the individual elements. There is one small facility in Estonia and the rest are in China. While I said, “chemically separate” most people involved with the process will agree that there is an equal amount of alchemy involved in the extremely complex process of separating each individual element from its neighbor. Just like with separating PMGs whereby you remove the Rhodium, next the Iridium, then Ruthenium and Osmium, the Palladium, leaving the Platinum, REE elements are separated one by one. This results in a whole lot of time, a lot of chemicals (sulfuric acid or nitric acid if you are Russian), and a lot of adjustments along the processing line. Have any of the touts seen one of these facilities? They range from several hundred separate processing tanks to over a thousand. The concentrate moves from tank to tank to be worked and for the last elements separated, it can take 12 months! If all you are looking for is Lanthanum, you can conceivably quit after the first separation and dump the remaining ore. If, however, you wish to gather up the small amount of Erbium that happens to be in the ore, you need to first separate 11 other elements. These elements are one atomic number apart from each, have strong bonds and it takes a pretty good amount of acid boiling to separate. Much like oil refineries are geared up to process specific types of crude oil feedstock, all current rare earth separation facilities (even in China) are set up for specific ores traditionally fed to the plant. For example, the lone non-Chinese separation facility in Estonia has processed loparite ore tailings from the Russian Kola peninsula Titanium mine since its inception. The process line (stainless steel tanks into which nitric acid is poured and heated at different temperatures along the way) is geared for that specific ore which has a known and specific element content. Much as a refinery geared to refine Bonnie Light Crude from Nigeria would find it almost impossible to refine Heavy Saudi Crude, this Estonian separation plant cannot process monazite ore without a massive change in the process line. Talk of multiple ore refining capabilities, a “washing machine” type dial to process any and all ores containing rare earth elements just is not feasible despite what is being touted.
In summation, Rare Earth “wannabe producing” company stocks are being hyped with little regard to the inherent differences they possess in mineral bodies, REE content by element, and permitting problems. In future posts, I will put forth research behind such premises as: “Can a Stand Alone RE Producer actually survive” (China is moving to an integrated Re market whereby the country’s largest steel producer, copper producer and aluminum producer are each taking a piece of the RE market), “What is China Really Trying to Accomplish with Rare Earths”, “Recycling versus Re-use”, “RE Stockpiles or Take-Aways, the Biggest Bang for the (taxpayers’) Buck”, and “Thorium, Can it Replace (or at least supplement) Uranium as a Nuclear Fuel Source and Give Life to the U.S. RE Industry at the Same Time?”

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29 Comments on " “The often overlooked or ignored details surrounding Rare Earths.”"

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Travis Johnson, Stock Gumshoe
Admin
4452
September 29, 2011 2:12 pm

Thanks, RPaul — really interesting note, you clearly know rare earths better than I do and it’s always great to get some informed commentary.

blackjack
Guest
0
blackjack
April 5, 2012 3:00 am

a lot has happened since this article and one thing is for sure the Mt Weld mine does not have high Thorium – far from it.”
Get an education and get the politics out of the Lynas rare earths issue
see it for what it is

the court hearing was put into a “break” by the plaintiffs
LYNAS wanted its day in court to give facts and were delayed yet again

If you want to see what is done with the REE process and the “waste” as they call it

watch this http://www.mobtv.my/public_events-1131.html

Dave Shortt
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0
Dave Shortt
September 29, 2011 3:13 pm

Great Article..I welcome your knowledge of this industry. I think ACH is one such company that bought a large chuck of the are Earths industry over in china. With the new regulation they might not have gotten such a good investment. However ACH looks like another play on rare earths along with REE and MCP.

blufox
Member
12
September 29, 2011 7:38 pm

Excellent, informative post RPaul and greatly appreciated. Have owned a fairly large amount of Lyscf, Lynas Corp of Mt Weld, since October 09 and look forward to hearing more.
/* Phil */

nickfraser99
Member
0
nickfraser99
September 29, 2011 7:38 pm
Thanks. This information confirms what I came to the conclusion of months ago, but which I would always get labeled a “basher” if i went to a message board with – that the hype surrounding rare earth companies is not justified and that like a modern day gold rush, while a few might possibly strike big, the majority will probably only lose money. Even without as detailed knowledge behind the science of it that you possess, just looking at the economics of rare earth firms doesnt seem to add up. The current annual market for rare earths is around $2… Read more »
Rpaul
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Rpaul
September 29, 2011 10:22 pm
I wish I could reply to all who left comments but as I am working out of a hotel room on my way to Nevada where I have three gold lode claims I will work through November, I just cannot. Your comments, however, could not go ignored (or delayed). I have prepared briefs for members of Congress, for VERY senior people in the Depart of Defense, to include those who sit on the Industrial Policy Board, as well as the U.S. Trade Rep. None of then could even grasp, let alone understand what you put in your reply! It is… Read more »
Mohd Razak khan
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Mohd Razak khan
September 30, 2011 5:54 am

Very interesting,have much to learn about analyzing companies and so forth.Especially those touts who are out to make a fast buck.Thanks,RPaul

alainbm
Member
1
alainbm
September 30, 2011 1:25 pm

I’d like to add my thanks as well. One of the things I found when I started researching the Rare Earth sector and more specifically Greenland Minerals and Energy was that a lot of these deposits turned up with Uranium as well. When I questioned what extra cost it would entail I never really got a direct response. The typical attitude is that the Uranium was seen as an additional element to sell.

A propos I just saw another headline that China is still trying to clamp down on unauthorized Rare Earth mining.
http://news.xinhuanet.com/english2010/china/2011-09/26/c_131161193.htm

sdmaley
Member
5
October 10, 2011 1:13 am

Given what seems to be mounting interesting in thorium for reactors, it might become worth more than whatever extra it costs to handle and process.

Sam
Guest
0
Sam
November 4, 2011 12:41 pm

You are right! However, who is digging and producing Thorium? Though it is a long term investment and probably I would by it in myson’s account.
My next response is for Travis, “The Great Gumshoe”,

Paul
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0
Paul
November 4, 2011 1:17 pm
Great article RPaul What I don’t understand is why Lynas built their separation plant in Malaysia. Labor cost is not a relevant factor in a highly complex modern (automated) facility. And with regard to separation/refining facilities I am not sure that the only western one is that in Estonia. According to their websites Neo Material and Great Western (Less Common Metals UK subsidiary) seem to operate refining plants. And then there are several recyclers (e.g. Umicore) with the ability to extract REE’s from electronic waste. Recycling can and will be expanded significantly if prices stay high. Miners without purification know-how,… Read more »
Sam
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0
Sam
November 5, 2011 8:32 am

Isn’t Lynas in bed with Mitsubishi? If so, it may be their decision for cheap labor and also for invironmental issues.

Myron Martin
Guest
0
November 4, 2011 12:30 pm
As an investor who was early to the Rare Earth sector, which has made me quite a bit of money, I too appreciated the article. The following comment was so appropriate it made me chuckle; ” It is very heartening to someone like me who spent over 2 years of his life digging for the facts and have so many policy makers make a collective “duh” when I raised these issues to read in gumshoe that yes, there is intelligent life out there because it sure wasn’t in the Capital” So what else is new, looking at the financial mess… Read more »
Sam
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0
Sam
November 5, 2011 9:56 am

Indeed! I like your comment You made my day……………………

Some time ago, I read about Neo Material Tecnologies. I liked the company and I wrote the name on a piece of a paper. when the time came to buy the stock, I could not find that piece of paper; and I was kicking myself. Now I got tha name. So I am waiting for Monday morning. I also went to your site and I liked it. I have now registered myself on your site. Thanks a lot.

Lloyd Moss
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0
Lloyd Moss
November 4, 2011 12:49 pm
I have been in and out of ree’s in the past 2 years. I am out now but watching closely. I wonder what you think of Stans Energy which is trying to restart a closed Soviet REE mining and processing operation in Krgystan and Greenland Mining and Minerals which is apparently sitting a large depost of REE’s commingled with Uranium and has been working on developing their own separation processes. Stans will probably beat GGG.ax to market. Here in the US Molycorp is saying they will have REE processing online “soon” but can they really do this given the environmental… Read more »
Sam
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0
Sam
November 4, 2011 1:01 pm
Travis, The Great Gumshoe, I know this is an old article but it came in good time. I have had bought Lynas long long time before ordinary people knew the Rare Earth Element. That time I was ‘Regular” and “Irregular” did not existed. Probably I bought after one of Gumshoes e-mail somebody teasing Lynas. I was making more than ten times and around that time I found that Gumshoe got out of that. I am right? Of course after a few days, Then I noticed that Lynas was going down and I followed Gumshoe’s footsteps but kept 10%. Recdently I… Read more »
Travis Johnson, Stock Gumshoe
Admin
4452
November 4, 2011 2:06 pm
I don’t know, I owned Lynas a couple years ago but haven’t invested in any rare earths stocks over the last year or so — meaning I missed out on that huge late 2010 rally in nearly all rare earth stocks, though much of that has been retraced for a lot of the companies. They’re still farther along than just about all of the miners, but I can no longer get my head around valuations for these stocks — the market for REEs is so small and fragmented among the various different elements, and so volatile and politically connected that… Read more »
Paul
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0
Paul
November 4, 2011 4:15 pm
Just found this report: http://www.reuters.com/article/2011/11/01/us-rare-earths-lifton-idUSTRE7A03Q120111101 Here are two quotes from it: 1)Without separation capacity, all you have is a loss-making ore concentrate company 2) “the non-Chinese mines with the highest deposits of the heavy rare earths, which they consider critical in terms of future shortage, including dysprosium, belong to Lynas Corp, Great Western Minerals Group, Quest Rare Minerals,Ucore and Tasman metals”. I cannot find any information about (access to) separation capacity or know-how for the last three – so that leaves just maybe two companies with the potential to survive. But if China wants, it can make any western company… Read more »
blufox
Member
12
November 4, 2011 6:21 pm

I bought a decent amount of LYSCF Oct-Dec 2009 and have done quite well. I wonder if the raison d’etre for locating their processing plant out of Australia is to avoid the possible pollution issues in their homeland. Suffice it to say I will hold unless it looks like my return drops considerably more.
/* Phil */

Sam
Guest
0
Sam
November 5, 2011 8:35 pm

Please see my reply to Response Item No. 8 above……….

goatpointer
Member
0
goatpointer
November 4, 2011 11:59 pm
Many of the comments above are not quite right. The item below is a response from Lynas about questions raised by “The Loony Left”. It may provide some balance and accuracy. Infrequently mentioned are Lynas’s rare earth interests outside Mt Weld. Also please apply your sceptic’s antennae when reading anything written by Jack Lifton. Suggest you do your own research and if you can come up with a better rare earth opportunity than Lynas I’d be delighted to hear about it. First of all, I would like to note that this is an official Lynas response to your blog, ‘Lynas… Read more »
blackjack
Guest
0
blackjack
November 5, 2011 8:27 am
yes the good doctor is correct i have also tried to set the record straight on many occasions however a lot of newspapers dont want to print facts but rather sensational stories that predict doom and gloom lets not forget also that Malaysia was screaming out for investors, jobs, new skills and they will get them through Lynas (possibly Siemens and BASF) I hold Lynas and they are well placed and have the orders and associates to get to market first IMO they also can buy from other companies the necessary dirt to increase their HREE’s IMO companies that announce… Read more »
blackjack
Guest
0
blackjack
November 5, 2011 8:43 am

also just read this http://www.techmetalsresearch.com/2011/11/the-ncpa-conference-on-rare-earths-and-national-security/
IMO if the US Senate is looking for reliable REE trading partners then Australia is a good choice
Also “One note of interest that came out of it, was that the recently passed law that governs the National Defense Stockpile (which does not as yet include rare earths), requires that the President of the United States, and only the President, be authorized to release materials from the Stockpile.”
It is almost certain that REE’s will be added to the stockpile sooner than later.

cooleenman
Irregular
1
cooleenman
November 6, 2011 6:07 pm

Reading all of this discussion has been most interesting. Having been attracted to rems some time ago I briefly invested in greenland minerals having “gumshoed” myself before I knew of the real gumshoe. Before reading this the whole field looked very dodgy, it now looks somewhat more investible, depending.

blackjack
Guest
0
blackjack
April 5, 2012 3:03 am

Get an education and get the politics out of the Lynas rare earths issue
see it for what it is

the court hearing was put into a “break” by the plaintiffs
LYNAS wanted its day in court to give facts and were delayed yet again

If you want to see what is done with the REE process and the “waste” as they call it

watch this http://www.mobtv.my/public_events-1131.html

blackjack
Guest
0
blackjack
June 9, 2012 9:05 am
whats happened to RPAUL he was going to write a few more blogs Anyway I dont know if people are aware that Lynas has built and has done some pre commissioning of its processing plant (LAMP) over 700 million $ WORTH. However, Lynas are waiting on the issuing of the pre operating license POL now changed to the temp operating license TOL. No concentrate can go though the plant as the license hasnt been issued, although approved years ago. The issuing of the 3 licenses has become a political football now and the Minister was to make an announcement last… Read more »
blackjack
Guest
0
blackjack
June 19, 2012 3:13 am

well the Malay parliament has been told by its special committee (PSC) that there is no reason to not issue the temporary operating license (TOL). Now it looks like some rubber stamping and then Lynas can import the concentrate into their LAMP.
Share price before any of this happened was over $2.20 and then TOL issues and GREEN issues tanked the share price to 88 cents. As of today the SP is approx $1 and the OS markets havent opened yet. A big run up is expected now however getting in at one dollar seems prudent now.
good luck all

blackjack
Guest
0
blackjack
July 8, 2012 2:21 am
AND still more delays from Malaysia seems they are certainly out of their depth on this one ALL lights are green now as the AELB asked for and received 2 supporting documents from LYNAS on the conditions that were imposed before the temp operating license (TOL) is issued. The TOL is 3 licenses and there seems to be no obstacles left as the court cases were thrown out, the IAEA is satisfied, the Science Minister has declared it the best processing plant in the World, the PM has given his OK on it, etc etc. There are a few radicals… Read more »
kbamfield
Member
0
kbamfield
September 21, 2012 1:56 am
update the temp operating license TOL has been approved and concentrate is probably on the ship now stage 2 is being worked on to increase capacity Mt Weld just announces increased JORC reserves RUMOUR has it that Lynas has some patent on part of the separation process – should be worth something the big end of town with its HFT is holding the SP at around 88 – 90 cents which is just ridiculous given that the kiln is being warmed as i write this its possible that there maybe some more protests however the Malay Government feels that it… Read more »
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