Articles in Category: Minor Metals

The Rare Earths Monthly Metals Index (MMI) dropped one point this month down to an MMI reading of 21.

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U.S. Looks Beyond China

One point of underlying tension between the U.S. and China, as the two countries have waged a bitter trade war over the past year, has been China’s dominance of rare earths.

The materials, crucial for use in a wide variety of high-tech capacities, overwhelmingly come from China.

As such, the U.S., looking to wean itself off dependence on China for said rare earths, is looking to form partnerships elsewhere, as MetalMiner’s Stuart Burns recently explained.

“Many will recall, and not a few lament, the failure to support California’s Mountain Pass mine, source of the country’s rare earth metals, as an example of how exposed the U.S. has become,” Burns explained.

“According to the Defense Visual Information Distribution Service (DFIDS), the U.S. was largely self-sufficient for most of the 20th century, with all of its rare-earth needs being met by the Mountain Pass mine.

“However, following a free trade deal between the U.S. and China in the 1990s, lower labor costs and regulatory requirements meant China could undercut Mountain Pass. Combined with problems over water supply pollution and stricter regulations, Mountain Pass was forced to shut down.”

As such, the U.S. is looking to shore up its rare earths supply chains by forming partnerships elsewhere.

“Now, the U.S. is seeking cooperation from potential supply countries outside of China — notably Australia, but also Greenland, Botswana and Peru,” Burns continued. “The U.S. is looking to develop not just alternative raw material supply but, more importantly, to develop refining facilities, too.

“A new body, the U.S. Development Finance Corporation, is set to play a significant role in facilitating the U.S. government’s efforts to take equity positions in mining projects and encouraging private sector investment, according to Frank Fannon, the U.S. assistant secretary of state for energy resources, according to Reuters.”

Trudeau, Trump Talk Rare Earths

Continuing the aforementioned theme, Bloomberg reported late last month that U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau recently discussed efforts to secure supply chains for rare earths.

According to the report, a joint action plan will be presented to the government coalition that forms after the Oct. 21 elections in Canada.

“It is in our interests to ensure that we have reliable supplies of these important minerals for technology, and it’s a conversation that our government is leading on,” Trudeau was quoted as saying at a recent press conference. “Canada has many of the rare earth minerals that are so necessary for modern technologies.”

Also of note, the next round of U.S.-China trade talks are scheduled for later this week.

However, the two countries are already on shaky ground heading into the talks.

Following a tweet by Daryl Morey, general manager of the Houston Rockets NBA franchise, in which he expressed support for anti-government protestors in Hong Kong, Chinese businesses announced they would sever ties with the organization. Chinese broadcast partners Tencent and the state-owned CCTV announced they would no longer broadcast Rockets games, marking yet another point of tension between the two countries.

In addition, the Bureau of Industry and Security announced it would add 28 Chinese organizations to the Entity List for “engaging in or enabling activities contrary to the foreign policy interests of the United States.”

“The U.S. Government and Department of Commerce cannot and will not tolerate the brutal suppression of ethnic minorities within China,” Secretary of Commerce Wilbur Ross said. “This action will ensure that our technologies, fostered in an environment of individual liberty and free enterprise, are not used to repress defenseless minority populations.”

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Actual Metal Prices and Trends

Chinese yttrium prices rose 0.4% month over month to $31.48/kilogram as of Oct. 1. Chinese terbium oxide dropped 1.2% to $540.68/kilogram.

Neodymium oxide fell 0.8% to $44,695.50/mt.

Europium oxide rose 0.3% to $30.78/kilogram. Dysprosium oxide fell 2.0% to $260.90/kilogram.

Pavel Ignatov/Adobe Stock

Before we head into the weekend, let’s take a look back at this week’s coverage on MetalMiner, which included analysis of Chinese steel production, the U.S.’s search for sources of rare earths outside of China, and falling copper and aluminum prices.

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Environmentalists are horrified by the impact of global warming on the Greenland ice sheet.

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According to the Financial Times, temperatures have risen more than twice as fast in Greenland as the rest of the planet because the Arctic sea ice is retreating and pollution is darkening the arctic ice, reducing its ability to reflect sunlight.

Greenland is blanketed in an ice sheet about a mile deep that covers 81% of its land area — four times the size of California, the Financial Times reported.

The environmental impact of a melting Greenland ice is not the topic today for a MetalMiner article, however significant implications will be for low-lying areas such as Florida and Bangladesh.

They say every cloud has a silver lining. For Greenland, as the ice retreats and the land is exposed, the vast island’s natural resources hold the potential for significant new sources of minerals and hydrocarbons (albeit from an environment that still holds considerable challenges).

President Donald Trump’s interest in Greenland was not misplaced, merely the approach he used.

A recent report by the Brookings Institution explores both the opportunities and challenges in exploiting an area rich in iron ore, lead, zinc, diamonds, uranium, oil and, crucially, rare earth minerals.

The population’s decision to support autonomous self-rule government in June 2009 was based in part on the belief that the country could move beyond fishing and tourism to generate enough GDP to replace the financial support of Denmark.

That such an assessment was made at a time of sky-high commodity prices is now history. Since then, both mineral and oil prices have halved; what appeared to be a potentially economically viable opportunity in 2008 seems not so viable today.

Sources: Brookings Institute

As the map from the Brookings Institute shows, there are significant potential reserves of oil and gas offshore. Nonetheless, despite the shortening winter season, the technical challenges of operating offshore oil rigs in such a hostile arctic environment make exploitation in the short-term economically unviable.

Quantifying Greenland’s mineral resource potential is still so sketchy that the U.S. Geological Survey (USGS) still consolidates Greenland’s results with Denmark’s, but the country already has a successful gold mine in Nalunaq and a ruby mine opened in 2015.

As some 80% of the landmass is still covered in ice, there is of course a vast area still unsurveyed, but the most attractive resource, from a strategic perspective, is undoubtedly rare earths.

A recent Financial Times report estimates Greenland holds 38.5 million metric tons of rare earth oxides, compared to total reserves for the rest of the world of 120 million tons.

It is no secret — and the cause of considerable anxiety in Western boardrooms — that China dominates the global production of these rare earths. More than 70% of rare earths are mined, and an even higher percentage processed, in China.

Beijing has used the threat of cutting off or restricting supplies in recent standoffs with Japan and clearly would not be above doing the same with the U.S. or Europe.

Two companies are already active in Greenland. One, Greenland Minerals, with extensive Chinese involvement, is making some progress. The other, Tambreez, a privately held Australian miner, has had its license application bogged down for years in bureaucratic delays but remains optimistic it has a viable resource (free of the contaminants so often found in Chinese deposits).

The Chinese have shown themselves willing to play the long game, investing now for a return much further down the road or for the sake of strategic positioning (as opposed to purely economic calculation).

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The U.S. has signed a memorandum to cooperate with Greenland on rare earth mining. However, the U.S. is playing catch-up and probably needs deeper government pockets than those available to U.S. rare earth miners, who have struggled to make a success out of U.S. resources in much more benign locations.

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner:

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The Renewables Monthly Metals Index (MMI) dropped two points for a September MMI value of 99.

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First Cobalt Eyes Restart of Canadian Refinery

First Cobalt Corp., a Toronto-based firm, is looking into restarting its idled cobalt refinery in Canada, Reuters reported.

First Cobalt CEO Trent Mell said the company will begin assessing the condition of the plant next week.

Last month, the Canadian firm reached an agreement with Glencore by which the latter would fund a feasibility study for the idled refinery.

“First Cobalt Corp. is pleased to announce that it has entered into a US$5 million loan facility with Glencore AG to complete advanced engineering, metallurgical testing, field work and permitting associated with a recommissioning and expansion of the First Cobalt Refinery in Canada,” First Cobalt said in a prepared statement Aug. 26. “Upon completion of a positive definitive feasibility study for a 55 tonnes per day (“tpd”) refinery expansion in Q1 2020 and subject to certain other terms and conditions and satisfaction of conditions precedent, Glencore is prepared to advance an additional US$40 million to recommission and expand the Refinery.”

As Reuters noted, once operational the refinery would become North America’s lone producer of refined cobalt for the electric vehicle sector.

Cobalt Prices Surge

Speaking of Glencore, its announcement of a planned shutdown of its Mutanda mine this year has seen cobalt prices reach six-month highs, Reuters reported.

Earlier this year, Glencore said it would halt production at the Mutanda cobalt and copper mine in the Democratic Republic of the Congo (where a majority of the world’s cobalt is mined); the site is the world’s largest cobalt mine.

LME cobalt, after reaching $95,000 per ton in March 2018, lost nearly 75% of its value over the next 16 months, falling to $25,000 as of late July. Recently, the price has picked up, rising to $34,750 per ton as of Sept. 6.

GOES Price Surges 7.4%

The MMI for grain-oriented electrical steel (GOES) jumped 14 points for a September reading of 199.

The U.S. GOES coil price rose 7.4% month over month to $2,745/mt as of Sept. 1.

German steelmaker Thyssenkrupp — a prominent producer of electrical steel — is facing a period of significant uncertainty, MetalMiner’s Stuart Burns recently explained.

Faced with financial challenges, the company is mulling its next steps, which include the possible sale of its profitable elevator business.

Evidence of its struggles, the German firm will be booted from the country’s blue-chip stock index, the DAX, later this month. Thyssen, which merged with Krupp in 1999, was a founding member of the DAX.

“For both suppliers and customers of the group, the most worrying development must be the gradual reduction in credit rating,” Burns wrote. “If suppliers cannot insure their debt, they cannot in many instances supply, thus forcing the group to diversify and fragment its supply base.

“The group has survived many trials and tribulations over the decades. It will no doubt survive the current period, but it will be a different, much reduced Thyssenkrupp that emerges in the decade ahead.”

Another giant in the elevator industry, Finland’s Kone, has hired a law firm to advise it during its planned takeover bid of Thyssenkrupp’s elevator business, Reuters reported Monday.

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Actual Metal Prices and Trends

U.S. steel plate rose 2.0% month over month to $797/st as of Sept. 1.

Chinese steel plate fell 5.6% to $577.25/mt. Korean steel plate increased 0.7% to $568.51/mt. Japanese steel plate gained 2.5% to $809.83/mt.

Rare earths are coveted around the world for their application in a wide variety of high-tech uses, from consumer electronics to military applications.

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However, a rare earths market dominated for years by China has presented a challenge to the U.S.

Toward that end, President Donald Trump this week directed the Pentagon to search for alternative sources of rare earths magnets, particularly cobalt samarium magnets.

In a determination pursuant to Section 303 of the Defense Production Act of 1950, Trump said the “domestic production capability for Samarium Cobalt Rare Earth Permanent Magnets is essential to the national defense.”

“Without Presidential action under section 303 of the Act, United States industry cannot reasonably be expected to provide the production capability for Samarium Cobalt Rare Earth Permanent Magnets adequately and in a timely manner,” Trump’s determination continued. “Further, purchases, purchase commitments, or other action pursuant to section 303 of the Act are the most cost-effective, expedient, and practical alternative method for meeting the need for this critical capability.”

In a separate letter — addressed to Rep. Maxine Waters, chairwoman of the House Committee on Financial Services, and Sen. Mike Crapo, chairman of the Senate Committee on Banking, Housing and Urban Affairs — Trump said there is a “shortfall in the defense industrial base relating to production capability” for samarium cobalt rare earth magnets.

“The Department of Defense will take actions to develop and purchase equipment and materials needed for creating, maintaining, protecting, and expanding production capability for Samarium Cobalt Rare Earth Permanent Magnets,” Trump said in his letter.

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Last year, the Trump administration omitted rare earths from a $200 billion tariff list on Chinese goods. (Earlier this year, MetalMiner’s Stuart Burns delved into China’s upper hand in the rare earths market and how it could use that as a bargaining chip in its ongoing trade talks with the U.S.)

According to the U.S. Geological Survey, U.S. imports of rare earths in 2018 reached a value of $160 million, up 17% from $137 million in 2017. From 2014-2017, 80% of the U.S.’s imports of rare earths compounds and metals came from China.

The Renewables Monthly Metals Index (MMI) gained three points this month, rising to a July MMI value of 105.

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Congo Cobalt Output Rises 3%

Cobalt output in the Democratic Republic of the Congo (DRC) jumped 3% over the first five months of the year compared with the same year in 2018, Reuters reported.

Cobalt production for the period reached 44,522 tons, according to the report, while copper production increased 11%.

The latter piece of information confirms another report from Bloomberg, which cites a cobalt specialist who projected artisanal mining of cobalt could drop by 70% this year as a result of falling cobalt prices.

A majority of the world’s cobalt is mined in the DRC. As such, falling cobalt prices have negatively impacted the DRC’s economy — according to the Financial Times, an International Monetary Fund projection calls for 4.3% growth in the country this year, down from 5.8% in 2018.

On Thursday, July 11, the IMF announced the disbursement of about $44.9 million to the DRC in support of the country’s “economic and financial reform program.”

“The Republic of Congo has been suffering one of its worst economic crises in recent years,” an IMF release states. “The crisis was triggered by the sharp decline in oil prices since 2014 and delays in the implementation of an effective policy response. It has resulted in an economic recession, large fiscal and current account deficits, unsustainable debt, an accumulation of a large stock of domestic arrears and an erosion in confidence associated with weak governance.”

The LME cobalt price rose to $95,000 per ton in early 2018, but has plunged since then, down to $25,500 per ton this week.

Plate Prices Slide

Meanwhile, plate prices from several countries declined over the course of June, including U.S. and Chinese plate prices.

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GOES

The GOES MMI, covering grain-oriented electrical steel (GOES), surged 11% this month for a July reading of 191.

Actual Metal Prices and Trends

The Japanese steel plate price fell 0.3% month over month to $793.50/mt as of July 1. Korean steel plate rose 1.2% to $596.66/mt.

The Chinese steel plate price fell 1.1% to $618.92/mt. U.S. steel plate dropped 4.0% to $866/st.

The GOES coil price surged 25.0% to $2,993/mt.

The Chinese neodymium price fell 1.6% to $64,804.90/mt. Chinese silicon rose 0.6% to $1,499.98/mt. Chinese cobalt cathodes gained 0.6% to $96,843.20/mt.

The Rare Earths Monthly Metals Index (MMI) picked up three points, rising to a June MMI value of 22.

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China’s Rare Earths

In light of last month’s developments in the long-running U.S.-China trade talks, MetalMiner’s Stuart Burns delved into what could be a big play for China.

Last year, the U.S. left rare earths off a wide-ranging list of Chinese imports to be targeted by tariffs (as part of the U.S.’s Section 301 probe), as the U.S. — and the rest of the world — depends on China for rare earths.

Last month, the U.S. raised tariffs on $200 billion in imports from China and China responded with retaliatory tariffs. On the heels of the tit-for-tat and President Xi Jinping’s recent visit to a rare earth magnet facility, some commentators are wondering if China could put the squeeze on the rare earths market.

“China is rattling the saber ever so softly to say that it may be more exposed to general trade on a balance of payments position – China exports more to the U.S. than the U.S. exports to China — but the U.S. (and the rest of the Western world, as it happens) is uniquely exposed to China’s control of not just rare earth elements, but the whole supply chain,” Burns wrote. “That supply chain includes everything from mining through refining to manufacturing of myriad components used in high-tech applications including from electric vehicles, cellphones, laptops, missiles and fighter jets.”

According to CNBC, China’s exports of rare earths dropped in May to 3,639.5 metric tons, down from 4,329 metric tons in April.

The rare earths market is notorious for its volatility; as such, it remains to be seen if the drop in exports is a calculated move or a one-off blip. As trade talks between the U.S. and China continue to take shape, market watchers will want to keep an eye on China’s export levels.

Malaysia PM: ‘We’ll Have to Renew’ Lynas License

On May 30, Malaysian Prime Minister Mahathir Mohamad told reporters, with respect to the ongoing discussions regarding Australian rare earths miner Lynas Corp’s license to operate in the country, “We think we’ll have to renew the license,” according to a report in the Straits Times.

Lynas, the largest rare earths miner outside of China, has battled regulatory challenges in Malaysia related to waste disposal. Disposal of two forms of waste at the miner’s Malaysian facility has been the focus of the ongoing saga, as the miner’s license to operate in the country expires in September.

The miner has previously said it would not be able to comply with the government’s conditions vis-a-vis waste disposal in the required time frame.

“We welcome the Prime Minister’s comments acknowledging the importance of the continuation of the Lynas operations in Malaysia,” Lynas said in a prepared statement May 31. “We will update the market as we receive further clarification from the Malaysian government.”

Actual Metal Prices and Trends

Chinese yttrium fell 2.4% month over month to $32.58/kilogram as of June 1. Terbium oxide rose 1.3% to $529.26/kilogram. Neodymium oxide skyrocketed this past month, jumping 27.7% to $50,681.30/mt.

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Europium oxide fell 13.7% to $33.30/kilogram. Dysprosium oxide rose 29.8% to $285.99/kilogram.

metamorworks/Adobe Stock

Cast your mind back nearly 10 years — for those of you in the metal business at that time, the market was briefly all about rare earths. For the first time in decades, all anyone could talk about was the West’s vulnerability to the supply of this misnamed group of highly important strategic metals and their salts.

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In fact, so excited did the manufacturing sector become that it spurred a whole raft of startup specialists as consultants, analysts and research bodies as metal prices peaked in the summer of 2011 and then gradually fell back.

Not wanting to sound like the harbinger of bad news, but we could be in for a repeat performance if the significance of President Xi Jinping’s visit last week to a Chinese rare earth magnet factory in the province of Jiangxi is looked at with the seriousness Beijing intends.

China is rattling the saber ever so softly to say that it may be more exposed to general trade on a balance of payments position – China exports more to the U.S. than the U.S. exports to China — but the U.S. (and the rest of the Western world, as it happens) is uniquely exposed to China’s control of not just rare earth elements, but the whole supply chain. That supply chain includes everything from mining through refining to manufacturing of myriad components used in high-tech applications including from electric vehicles, cellphones, laptops, missiles and fighter jets.

Source: The Telegraph

An intriguing article in the subscription-only section of The Telegraph newspaper detailed the long-term risk the West has been running for years on rare earths elements (REE) and how REE could be the next flashpoint in an escalating trade war between China and the U.S.

The U.S. is nowhere near self-sufficient in REE, with even ores mined at California’s Mountain Pass shipped to China for processing and Lynas Corp’s proposed U.S.-based processing plant in Texas still years away from shipping a kilogram of refined metal. The post suggests China does not even have to announce an embargo of exports — it could close down selected parts of the U.S. supply chain by restricting supply to any number of component suppliers in China or shutting down a supplier on “environmental grounds.”

With the U.S. reliant on Chinese REE for whole components of U.S. manufacturing (examples cited range from simple car starters to chunks of aircraft), which are pre-finished in China using rare earths before shipping to the U.S.

Arguably, the military-industrial complex is even more exposed than the private sector.

F-35 Joint Strike Fighters need the thermal protection of rare earth coatings. Hellfire missiles, the Aegis Spy-1 radar and the sights of Abrams M1 tank all rely on rare earths. So do precision-guided weapons, the post’s list goes on, yet the White House and, indeed, successive U.S. administrations have been strangely sanguine about this vulnerability that covers not just the processing of ore to refined metals, but the infrastructure to use those refined metals and salts in a wide range of applications in the early stages of multiple supply chains.

Many, if not all, of those roads lead to China.

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Maybe President Donald Trump should have used some of his brief time in Japan devising solutions to this shared problem with Prime Minister Shinzō Abe rather than watching Sumo wrestling and playing golf.

The Rare Earths Monthly Metals Index (MMI) held flat this month for a May value of 19.

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Lynas Saga Continues in Malaysia

As we’ve noted in previous installments of the Rare Earths MMI, Australian rare earths miner Lynas Corp. continues to deal with regulatory challenges at its Malaysia operations.

Lynas, the largest miner of rare earths outside of China, is facing two conditions from the Malaysian government regarding the renewal of its license to operate in the country (which expires in September 2019).

The conditions from the Malaysian government related to disposal of two forms of industrial waste.

“We also continue to engage in ongoing discussions with the government to seek to resolve the remaining issues related to the pre-conditions for Lynas’ licence renewal, as detailed further below,” the company said in its Q1 earnings report. “We have restated our commitment to Malaysia, to being a valuable contributor to the economy and to playing a vital role in supporting the development of Malaysia’s 4.0 Industries.”

Tensions have picked up after comments from Malaysian Prime Minister Mahathir Mohamad last month.

“So what we have done is we have opened up the business to other people, and there are other companies willing to buy up or somehow or other acquire Lynas, they have given us a promise that in future before sending the raw material to Malaysia they will clean it up first, they will crack it and decontaminate it in some way with regard to radioactivity, so that when the raw material comes here, the volume is less and the waste from that raw material is not dangerous to anybody,” the prime minister said.

Lynas said it had reached out to the Malaysian government for clarification regarding the prime minister’s comments.

Meanwhile, last month two groups of protestors, representing Malaysian environmental groups and Lynas workers, raised their voices on the issue.

According to a Reuters report, members from each group provided statements to government representatives, with the group representing environmental interests calling for the suspension of Lynas’ license, while Lynas workers touted the plant’s role as a source of jobs.

Actual Metal Prices and Trends

The yttrium price fell 0.4% month over month to $33.39/kilogram as of May 1. The terbium oxide price rose 0.6% to $468.21/kilogram.

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Neodymium oxide plunged 8.9% to $39,698.10/mt. Europium oxide dipped 0.4% to $38.59/kilogram. Dysprosium oxide jumped 0.6% to $220.38/kilogram.