Last month I paid a visit to the Miller graphite project in Canada, under development by Canada Carbon Inc. (TSX.V:CCB) in Grenville Township, Quebec. The Miller property was the home of a historical graphite mine in the latter half of the 19th century.

Grenville is situated 50 miles west of Montreal, approximately half way between that city and Ottawa. The journey from Montreal took about 75 minutes via Highway 50. Grenville is close to the town of Hawkesbury in Ontario, with the two sitting on opposite sides of the Ottawa River, which forms much of the boundary between the two provinces.

Generally I don’t visit a mineral project under development, until it has an associated mineral resource estimate that conforms to guidelines such as NI 43-101 or the JORC code. It’s the same criterion that I use for including projects on the TMR indices for rare earths and for graphite. A mineral resource estimate is a useful initial filter for discerning the evolution of technical knowledge associated with a given project. Miller does not have a mineral resource estimate yet; I had, however, heard about the unusual nature of the Miller project (which we’ll get into later) from a number of sources. I therefore decided to accept an invitation to come visit the property, to see for myself. Canada Carbon published a technical report on Miller in May 2014, which follows the NI 43-101 guidelines, in addition to other data associated with work on the project. This report did not include a mineral resource estimate.

I was hosted on my visit by Bruce Duncan, Executive Chairman and CEO of Canada Carbon. Also joining us were Steven Lauzier, the project geologist, and Rémi Charbonneau, a consulting geologist who is the Independent Qualified Person for the project.

The initial exploration work at the Miller property started in February 2013, with a ground survey to locate the original Miller Mine, and to confirm the presence of graphite veins and pods. Subsequent work consisted of additional ground and airborne prospecting work, identifying a series of anomalies via geophysical techniques such as small-loop frequency-domain electromagnetic (MaxMin), very-low frequency (VLF), induced polarization (IP) and versatile time-domain electromagnetic (VTEM) surveying. Significant anomalies of interest were then targeted for ground trenching, accompanied by core drilling.

The trenching work identified a number of graphite veins and pods throughout the property. The graphite can be found alone or associated with minerals such as wollastonite and pyroxene. It has also been found in disseminated form in marble and sulphide-bearing paragneiss, but the veins and pods are of primary interest because of their high grade and potential purity. Mr. Lauzier indicated that veins with grades of 40-80% carbon as graphite (Cg) and pods with grades of 10-15% Cg are common on the property.

Through the trenching work, the company identified three significant showings, designated VN1, VN2 and VN3, and which we visited in turn. The first of these, VN1, contains an irregular vein of semi-massive, coarse graphite, originally under 1-3 m of glacial till, along with pods of graphite mixed with wollastonite. The rocks here consist of banded paragneiss and marble units. The primary vein is exposed along a strike length of 12.8 m, with widths ranging from 10 cm to 1.7 m. Numerous secondary veins can be seen.

VN2 has a massive graphite vein up to 1.5 m thick, and numerous secondary veins and pods which follow the contact between the local marble and paragneiss rocks. Core drilling at this showing indicates that this contact is at least 39 m deep below the surface. VN3 is another massive graphite vein, some 2 m thick and 5 m long, hosted in unaltered marble. Six shallow cores were drilled at this site and the graphitic horizons were encountered below surface, confirming the initial event of the anomalies. You can see these showings in the images below.

Mr. Lauzier indicated that there are numerous additional graphite-wollastonite pods on the Miller property that have been exposed during trenching. The pods are pegmatitic in nature and generally occur in the contact zone between the paragneiss and marble. Numerous graphite veins have also been discovered as well. Mr. Lauzier commented that the graphite veins are likely the result of the transportation of carbon in hydrothermal fluids, which were channeled up through fractures in the rock over time. As the fluids cooled to 700-800 °C, the graphite was precipitated in large, highly crystalline flakes.

During my visit, on-ground grids for additional IP surveying were being prepared across the property.

So what is the big deal about this type of graphite? The formation of hydrothermal veins leads to the presence of very high-purity graphite and such occurrences are rare. The only current source in commercial quantities is the island of Sri Lanka. Once extracted, the graphite is relatively easy to process. The high degree of crystallinity in vein graphite (as a result of the way that it was formed), leads to thermal and electrical properties that are superior to the more typical natural-flake graphite, which forms from carbonaceous sedimentary deposits under heat and pressure. The most interesting and potentially lucrative applications for hydrothermal graphite materials, however, are in the nuclear industry.

So-called nuclear- or reactor-grade graphite is high-purity graphite that is used as a moderator material in thermal nuclear reactors that utilize uranium. Moderator materials are used to convert so-called fast neutrons into thermal neutrons during the fission process, which leads to a sustained (and controlled) chain reaction, and the liberation of significant quantities of energy. Reactor-grade graphite can also be used as a neutron reflector, which can be used to generate a chain reaction from a mass of fissile material that would normally not ‘go critical’ without the presence of the reactor material. In essence, it reduces the amount of uranium or other fissile material required, to sustain a chain reaction.

Because of the interaction of the graphite with neutrons during the nuclear process, it is vital that the material be free of impurities that will absorb neutrons. Boron is the most problematic impurity in this regard; reactor-grade graphite must have a boron, or equivalent-boron content (EBC), of less than 5 ppm. EBC is a measure of the collective effects that all impurities present have, on neutron absorption.

In June 2014, Canada Carbon announced the completion of purity testing on lump / vein graphite samples taken from the Miller property, indicating that a simple flotation process alone could produce graphite with purities of 99.8-99.9% total carbon (C(t)). With an additional simple thermal process, exceptional purities of 99.98-99.998% C(t) were achieved. Significantly, the EBC of the material after flotation concentration alone was 1-3 ppm, confirming that the material is nuclear-purity graphite, without needing hydrometallurgical treatment of any kind. Such material commands significant price premiums over more conventional natural graphite. Test results showed particularly low levels of sulfur in the graphite. The ease of upgrading via flotation would indicate that the impurities present are found at the surface of the graphite flakes, and not significantly intercalated or embedded in the material as is common with more conventional natural flake graphite. The company has published its assays on its website, so that calculated values such as EBC can be reviewed.

Miller is located on private land, whose owners entered into a surface-access agreement with Canada Carbon. Relations between the company and the land owners are apparently cordial; during the visit we met one of the owners, who is supervising the excavation of bulk sample materials from the site, on behalf of the company. Canada Carbon has permission to remove up to 480 t of materials from the property for processing in a pilot plant, to be built by SGS Canada Lakefield (SGS), and based on the aforementioned initial bench-scale flotation process, previously developed by SGS. The company is in the process of crushing and shipping the first 100 t of material from the site, and has until February 2015 to complete the rest of the sampling.

The property is well serviced logistically; In addition to Highway 50 and a power line which both cross the property, there is a rail line less than half a mile south of the highway and access to water via a river which also passes through the property.

The graphite veins and pods that are present at the Miller property make it highly prospective for the production of nuclear-grade graphite – but they also make it a real challenge to be able to produce a traditional mineral-resource estimate. Such estimates are typically derived from drilled samples taken across a project, with the mineral content found within the cores used to establish a 3D model of the geology of the deposit. This is fine in a deposit where the graphite or mineral of interest is disseminated spatially in the host rock; but when graphite occurs in highly concentrated veins and pods, drill results are likely to be ‘hit or miss’, with mostly ‘miss’.

This is one reason why the identification of graphite occurrences starts with electromagnetic and other geophysical surveying tools, followed by on-the-ground trenching; given the thickness of the initial veins and pods trenched, there should be little trouble in finding significant quantities of graphite on the project. Without a way to properly quantify that graphite however, within the wider project space, how does one move the project forward into a preliminary economic assessment or pre-feasibility study, which will comply with the requirements of NI 43-101? Just as important, how do potential future off-take partners develop a comfort level that the graphite will be there, in the years to come?

I put these questions to Mr. Duncan, who acknowledged the challenges right away. He commented that the unique nature of the deposit has already generated significant interested from end users, who are not only interested in the graphite for its potential nuclear applications, but also for other end uses where very high purity and / or crystallinity is an absolute requirement. He said that such end users are used to acquiring materials from Sri Lanka, where mining is conducting on a rolling basis; resources are identified and then put into a mining campaign with a one-to-two year horizon. As the known occurrences are depleted, new resources are identified by drilling and put into the queue for subsequent mining. Many airborne EM anomalies were found out over the Miller Property. An IP survey on anomaly E1 revealed many different conductive and chargeability anomalies. It appears that the Miller Property could contain sufficient newly discovered graphite occurrences to develop a model based on exploring and mining the discoveries as they are made, without developing a resource model for the property as a whole.

This approach does not necessarily lend itself well to traditional mine financing of course, but Mr. Duncan indicated confidence that the project could be bootstrapped into operation, with a combination of advances on future off-takes from strategic partners, and other non-traditional sources of financing, that do not necessarily require placements in the open market (and which would require greater detail in terms of mineral resource estimates and the like).

While SGS continues to process the initial 480 t of material from the Miller stockpile, Mr. Duncan said that the company will also continue with characterization and purity tests of the graphite material, provide samples for potential end users as well as advancing further exploration of the Miller property. Although he would not comment on capital expenditure estimates – due to regulatory compliance – the cost of mining graphite at the Miller property holds the potential to be comparatively low, versus a conventional open-pit graphite mine in a more remote location. Given the accessibility of the graphite veins, and their apparent thickness and shallow depth (and, in many instances, their location at surface), Canada Carbon’s extraction costs may be particularly low. If the thickness of the initial veins and pods trenched to date, is found elsewhere on the property, then significant quantities of graphite may be present.

Since my visit to the project, Canada Carbon has released additional test results that indicate that certain properties of the Miller lump / vein graphite match or even exceed those found in synthetic graphite. Both tap (bulk / unprocessed) and skeletal (actual) densities were shown to be close to that of synthetic graphite; the specific surface area and porosity levels of the Miller graphite were found to be significantly lower than for synthetic graphite, which is particularly desirable in the production of anodes for lithium-ion batteries. This combination of properties means that once commercially available, graphite produced from the Miller property may be able to command prices as high as $10,000-20,000 / tonne, based on recent cost estimates from the likes of Industrial Minerals and others for synthetic graphite.

The Miller property is clearly an unusual and possibly unique graphite project; and given the indications that lump / vein graphite sources in Sri Lanka are diminishing, a hydrothermal lump / vein deposit in North America would be highly attractive to numerous end users. The key challenge for the project will be to be able to put in place a financing structure that will allow the project to go into commercialization, without the benefit of establishing a minimum level of confidence in the size of the resource present, using the usual means of reporting. Nevertheless, if strategic and other partners can be persuaded to work with Canada Carbon on the basis of the excellent metallurgical results obtained to date, the project has a good chance of going into operation.

My thanks go to Mr. Duncan, Mr. Lauzier and Mr. Charbonneau for hosting my visit, and for numerous useful discussions.

Disclosure: at the time of writing, Gareth Hatch is neither a shareholder of, nor a consultant to, Canada Carbon Inc. He did not receive compensation from Canada Carbon or from anyone else, in return for the writing of this article.

A couple of weeks ago the US Department of Energy (DOE) announced a Request for Information (RFI) on rare-earth metals and other materials used in the energy sector. This follows on from a similar solicitation made last year, that culminated in the publication of the DOE’s Critical Materials Strategy in December 2010.

The DOE says that this second RFI will be used to update the Critical Materials Strategy, and will also cover areas not considered in the original document, such as fluid-cracking catalyst materials for the petroleum refining industry.

The DOE is soliciting information in eight categories:

1. Critical Material Content
2. Supply Chain and Market Projections
3. Financing and Purchasing Transactions
4. Research, Education and Training
5. Energy Technology Transitions and Emerging Technologies
6. Recycling Opportunities
7. Mine and Processing Plant Permitting
8. Additional Information

The deadline for RFI submissions is May 24, 2011 and submissions from the public are welcomed. You can get more information from the DOE Web site.

In discussions and presentations on rare earths and their extraction and processing, junior mining and exploration companies are frequently asked to discuss how they plan to handle and “dispose” of any thorium present in the deposit [especially if the deposit contains monazite]. The presence of thorium in such deposits is usually perceived to be at best a nuisance and at worse, a potentially costly regulatory problem, because of its slightly radioactive nature.

And yet, it wasn’t always the case that thorium was perceived to be a problem. Many of the rare earth deposits known today, were discovered by geologists and others looking for either uranium or thorium-bearing minerals. Former thorium-producing mines are now being re-examined and re-vamped as rare earth mines.

Thorium was at one time the subject of significant research as part of the development of nuclear fuel cycles. It ultimately lost out to uranium as the metal of choice for such processes, primarily because the uranium fuel cycle was particularly suited to the production of materials for use in weapons manufacture. Thus the decline in interest was a result of political, not technical reasons.

In recent years, however, there has been a resurgence of interest in the use of thorium for a modernized version of the nuclear fuel cycle. According to the Thorium Energy Amplifier Association [ThorEA], there are a number of reasons for this:

• Thorium is over three times more plentiful than uranium and the process of extracting it from minerals is relatively straightforward;
• Thorium has a higher energy density than uranium. According to ThorEA, there is enough energy in 5,000 tonnes of thorium to provide total global energy needs for one year;
• Fuel cycles that use thorium are inherently proliferation-resistant [ironically the very reason why thorium fell out of favor with the industrial-military complex decades ago], with negligible plutonium production;
• Such fuel cycles have better nuclear characteristics, better radiation stability and longer fuel cycles than uranium fuels;
• It is possible to use thorium fuel cycles to effectively destroy legacy plutonium and other nuclear waste products.

A number of systems have been proposed in order to develop a thorium fuel cycle. A couple of weeks ago, ThorEA published a report on one such concept – the Accelerator Driven Subcritical Reactor of ADSR. Without getting bogged down in the details, an ADSR system couples a nuclear reactor core with a high energy proton accelerator. While not a new concept, the ThorEA report revisits the concept and analyzes the feasibility of such a system as a means of generating electricity.

If, realistically, nuclear power generation has to remain a central plank of any future energy development program to either reduce carbon dioxide emissions or the burning of fossil fuels, it seems to me that the advantages of a thorium-based fuel cycle significantly outweigh those associated with uranium-based systems. While certainly a long term project, developing such cycles would also simultaneously provide a destination and future customers for the thorium currently discarded as a waste product of the rare earth extraction process. Surely a win-win for all concerned?

You can download a copy of the ThorEA report from here – well worth a look.

Last weekend I listened to an audio clip broadcast on Australia’s ABC Radio National, and I think, if you have an interest in investing in the development of rare earth supply chain dynamics, you should also listen to it. You can listen to the show via the clip below:

[wpaudio url=”http://mpegmedia.abc.net.au/rn/podcast/2009/11/bst_20091113_0643.mp3″ ” text=”Rare Earth Metals – Nov 14, 2009″]

I’m certain that the above clip was edited out from another, 45 minute show that also ran on ABC Radio National’s Background Briefing program over the weekend, and was a good survey of the current issues in the market fundamentals (i.e. the current supply and demand situation) of the rare earth metals. You can listen to the show via the clip below:

[wpaudio url=”http://mpegmedia.abc.net.au/rn/podcast/2009/11/bbg_20091115.mp3″ text=”Rare Earths and China – Nov 15, 2009″]

The first clip cited above, helped me to understand why the Chinese mining industry is interested in the Australian miner, Arafura Resources, which I do not mention in my surveys because, although it is one of the very few “listed” companies with a rare earths deposit (known as Nolan’s Bore), it is, to the best of my understanding, not ready to go forward due to open issues with its “metallurgy.” This is the term used in mining to describe the chemical engineering processes needed, to economically extract the desired minerals from the mined ore concentrates, and then to separate them into their constituent elements in a form in which they can be further processed to usable materials. The main issue is always economics. The metallurgy must finally result in products that will sell for more at that point, than they cost to produce. It is very important to note that an environmental issue can have an economic impact on a project, that makes the ultimate material cost prohibitive, even if the chemical processes involved do not on their own make the costs prohibitive.

This comes out strongly in both of the clips above as the Lynas Chairman, Mr. Nick Curtis, alludes to the problems caused for Arafura Resources by the fact that their Nolan’s Bore ore body contains both of the naturally radioactive elements, uranium and thorium.

An environmental commentator then uses inflammatory words such as “dirty” and “dangerous” to describe what he calls the historical mining of the rare earths (anywhere), through their extraction from formations known to geologists as monazite mineral sands, in which, as Mr. Curtis points out correctly, thorium is always found along with the rare earths.

The commentator goes on to tell us that the citizenry of Darwin, Australia is “concerned” with a plan by Arafura Resources to “dump” rare earth processing residues from Nolan’s Bore containing “yellowcake: ( a common name for the yellow uranium oxide U3O8-containing ore known as carnotite when found alone) on an island in Darwin Harbor. He doesn’t mention, or if he does, I didn’t note it, the final destination of the thorium from the Nolan’s Bore operations.

I’d like to point out to my readers that I didn’t know of the Darwin island scheme or that the radioactive residues were such an issue, until I heard the ABC commentator and Mr. Curtis’ comments during the last two days, but I must admit that I take a different view from theirs.

Perspective is the key to objectivity. So, what is the Chinese perspective on all of this?

China is very interested in uranium for current use and in thorium for future use in nuclear reactors to produce electricity for civilian use without the need to burn fossil fuels. In addition China seeks uranium for its military programs. China last year instructed its domestic rare earth processing plants to hold all thorium produced as a byproduct for government use. This has always been the requirement in China for any uranium produced anywhere.

I’m certain that the current Chinese minority shareholder in Arafura Resources would be willing to buy and export to China all of the uranium or thorium produced in Australia by Arafura Resources (or anyone else) at market price.

I am not confusing China and Chinese mining companies here; they are one and the same with regard to their primary focus on growing China’s economy. I do not see any need to name individual Chinese entities at this point in the discussion.

Mr. Curtis and well known Australian rare earth expert, Dudley Kingsnorth, who once worked for Lynas, both point out that Australian monazite deposits were the source of 25% of the world’s rare earths in the 1970s and 1980s and that the thorium (and uranium?) contained in them caused their then refiner, France’s Rhodia, SA, to ultimately transfer their processing where possible to China, where it was said on the program that environmental controls were less stringent.

What was not said, was that until the Lynas refinery being built in Malaysia is ready – in perhaps 2-3 years – any ore concentrates produced in Australia by anyon,e will have to go to China also, even those produced by Lynas, should anyone want to refine them. Mr. Curtis indicated that Lynas’ ore does not contain thorium. What he failed to note was that even if it does contain thorium and uranium, those elements will be recovered either in China or in Malaysia.

What also was not said by anyone on the show, was that neither of the Australian deposits has significant amounts of the higher atomic numbered rare earths, dysprosium, terbium, or europium. Interestingly enough, the show mentioned those rare earth elements frequently, but failed to mention that they are not present in Australian deposits in any significant amount. The “heavies” come only from China today, but I think they will soon be coming from Canada, the U.S. and the Republic of South Africa.

I’m going to discuss the topic of the relative importance and the relative value of rare earth deposits in a lengthy article to appear here at The Jack Lifton Report next week, after I discuss “who’s going to win the race to be the first to produce the heavy rare earths outside of China?” this coming weekend, November 22, at the Hard Assets Conference in San Francisco. Come by and talk to me at the expert round table there or, if you can’t, be sure to catch the article here next Monday.

The linkage of the rare earths, thorium, and uranium needs to be taken into account by those who are looking to produce rare earths or invest in their production.

China is soon (September 2-6, 2009) holding the first public workshop on the utilization of a non-proliferative thorium fuel cycle in civilian nuclear reactors since the late 1960s. Now as in the 1960s, Atomic Energy of Canada’s existing CANDU reactors are being tested, both by AECL and, apparently, by Chinese users of the CANDUs, to see how they would perform if retrofitted to use a thorium fuel cycle. Norway, Russia, and the USA are also looking at thorium fuel cycles and designs for reactors based on them. Some of these studies are continuations of ones that were first performed in the 1960s. The USA, for example, had several experimental thorium fuel cycle utilizing reactors then. China has a substantial amount of thorium produced annually as a byproduct of her global-class rare earth production in the Inner Mongolian Bayan Obo region. China currently imports uranium for her existing and planned new power reactors for civilian use. China would have no import reliance at all for thorium.

The People’s Republic of China (PRC) today produces nearly all of the world’s supply of rare earth metals in the Bayan Obo region of Inner Mongolia.

Simultaneously, and as a natural consequence of this rare earth production, China produces an undisclosed but considerable amount of thorium. Thorium is a naturally-occuring radioactive metal, which is second, in natural materials, to uranium as a choice for fueling nucler reactors producing heat by controlled fission.

Because thorium reactors would not produce (breed) weapons grade plutonium, and, in fact, could use up plutonium by “burning it” to initiate the driving reaction in a thorium reactor, the militaries of all nations have in the past prevailed on their governments not to further the development of “thorium reactors,” so that by the mid 1970s the last experimental ones in use were shut down.

Today there is a need to end proliferation, and to destroy the plutonium from decommissioned weapons. The simple fact is that there is a lot of thorium around, perhaps multiples of the amount of accessible uranium, and there is a current revival of interest in the thorium fuel cycle as a basis for the production of electricity, without the production of greenhouse gases, and as a basis for shipborne nuclear propulsion systems for both civilian and military use.

China is well on the road to the Thorium Renaissance, and this September will host the first conference on that topic open to everyone.

The USA and India have most of the world’s accessible resources of thorium. The USA has in fact the only primary thorium deposit – one in which the principal output of which would be thorium – in the world.

I’m planning to be at the Chinese Thorium Conference; I’ll report to you on what I see and hear.

I have an idea for an item to be placed on the President’s agenda to promote the security, self-sufficiency, economic well being and energy independence of the United States. I have written out the idea in the form of a specific first “bill” of its type to be introduced into the U.S. Congress. Although I have identified a real company and a real national laboratory in the body of the proposed bill, I intend this proposal to be general and for its funding and support to be open to any qualified domestic American mining exploration company and any national laboratory or agency that the Congress may specify to support in the national interest. I would also hope that language could be written to include the mining exploration companies of America’s neighbors and friends as recipients of such support.

I am not a lobbyist, nor do I own any interest in any mining company anywhere. I also do not know any members of the U.S. Congress. Nonetheless, as a concerned private citizen, I hope someone in the Congress or the executive branch of the U.S. Government will read this proposal and come forward to discuss it. I note, also, that I am not a lawyer or a professional legislative draftsman, although I did study legislative drafting nearly 40 years ago while attending the University of Detroit School of Law.

The Critical Metals and Minerals Independence and Security Acts of 2009 – Part I: The Rare Earth Metals and Thorium

Whereas it is necessary at all times to maintain the economic well being and security of the United States, it is therefore necessary to ensure that, whenever and wherever possible, both the civilian and the military industrial bases of the United States have an uninterrupted supply of raw materials, produced as much as possible from domestic primary resources, and be as little reliant, or not be reliant at all, for such raw materials on foreign sources of supply, and

Whereas it has become recognized that many less common metals, for example those known as the rare earths and thorium, and many less common minerals are critical to modern technologies, which means that the technologies cannot be built at all without the use of certain of these less common metals and/or less common minerals, so that as a class these metals and minerals have come to be classed as critical metals and minerals, and

Whereas it is important to the economic and military security of the United States that domestic resources of critical metals and minerals be developed, whenever possible, in quantities that lead to domestic self-sufficiency, and

Whereas it is therefore vital to the economic health, welfare and security of the United States that the metals and minerals critical for its economic well being and military security, which are present within the continental United States, be identified, cataloged as to their practical availability, produced, and stockpiled as rapidly as possible, and

Whereas this means that after the identification of such critical minerals and metals 1) The exploration for them, 2) The development of mining and refining processes for them, and 3) Methods for storing them in useful forms must be supported by the United States Government as a matter of urgent national priority, which means that it is understood that there is a time-based priority for the development of individual critical metals and minerals, as they are not being used in equal proportions simultaneously, so that

Therefore, there is an urgent need for the government of the United States to adopt the prioritization, in time, of the supply of critical metals and minerals both for private industry and for the 21st century military as identified by the National Academies and published in two separate studies: 1) Minerals, Critical Minerals, and the U.S. Economy (2008) and 2) Managing Materials for a Twenty-first Century Military (2008), which publications catalog the metals and their uses that are likely to bring about economic or security crises if their supply is interrupted and which publications include charts showing that the most likely metals and minerals to be interrupted are always those for which the United States relies all or in the most part upon imports from politically unstable or unfriendly foreign nations and further show that such import reliance on politically unstable or unfriendly nations for critical metals and minerals is increasing dramatically.

Therefore, as a starting point based on the results of both of those studies, this act shall identify and encompass the development of domestic resources of the rare earth metals, scandium, yttrium, lanthanum, cerium, praseodymium, neodymium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium and thorium as an urgent priority, and

Therefore, the Congress shall adopt the identification of the domestic resources of the rare earth metals and thorium as located and certified and to be revised and published, in the case of the rare earths, in May 2009, by the USGS, within the data in Rare Earths Statistics and Information, and in the case of thorium already published, as of March 31, 2009, within Thorium Statistics and Information, and

Therefore, Congress shall note in particular that it is identified in the Thorium Statistics and Information, cited above, that the largest known deposit of primary thorium ore in the United States is certified and verified to be within the State of Idaho and is owned by a private company, Thorium Energy Inc., 100% of the ownership of which is held by American citizens. Further, the Congress shall note that said Idaho deposits of thorium are commingled with large deposits of rare earths, the details of which will be noted in the above mentioned update of the Rare Earth Statistics and Information update to be published in May 2009 by the USGS.

In furtherance of the purpose of this act, Congress shall appropriate the initial sum of $500 million to be used to: 1) fund the exploration for new domestic sources of rare earths and thorium, 2) fund the study of the extent of domestic resources of rare earths and thorium already identified by the USGS, 3) fund the development of process technologies for the refining of existing domestic ore bodies of rare earths and thorium, and 4) fund the study of storage technologies, if necessary, for the stockpiling of the most appropriate forms of rare earths and thorium, and to achieve these goals

Congress shall create and additionally fund a center for the study of critical metals and minerals as an adjunct to the National Laboratories, operated by the Nuclear Regulatory Commission, already extant in the State of Idaho and, further, Congress shall mandate that from this time forward any commercial facility built, or upon which construction has begun after the effective date of this act, within the continental United States or its territories by any foreign-owned entity for the processing of domestic American ores for critical metals or minerals of any kind as defined by this act but in particular for the processing of ores and concentrates of rare earths and thorium, as defined in this act, or as identified for the purpose of this act by the POTUS, shall be required to agree to process and to process related and appropriate domestic ores of rare earths and thorium from any domestic American source as a service for which the charge is to be at actual cost, as determined by the Inspector general of the GAO, plus a fair “profit” to be determined by a binding arbitration where the arbitrator has been appointed by the Secretary of the Interior or the Secretary of Defense as the exact situation warrants.

Further, as of the effective date of this act no rare earths or thorium ores, concentrates, or finished goods, or any critical metals or minerals as defined herein shall be exported from the United States by any private entity, domestic or foreign, without a license issued by the Department of the Interior or the Department of Defense, and, further, such licenses shall specify the quantity as well as the type of critical metal or mineral as well as the end-use intended, and

Further, no device intended for military use needing a critical metal or mineral shall, from the date of the passage of this act, be built using an imported critical metal or mineral until it is determined by the Secretary of Defense that no domestic source for the said critical metal or mineral exists, and in the event that such a source exists, but is not developed, the United States shall guarantee the necessary financing of the domestic source for any competent company seeking financing to develop the resource if such development is at all possible and not prohibited under the laws and regulations of the United States.

The New York Times reported yesterday that the world’s oil giants are not convinced by President Obama’s plans to reduce oil consumption.

The energy calculus that drives the creation of alternate sources of electricity is very simple: The world runs on the fuel that delivers the lowest cost per watt. The key problem today with the electrification of cars, by which I mean the change of power trains for private passenger carrying vehicles. from hydrocarbon-burning internal combustion engines (ICEs) to electric drive trains powered by batteries, is the initial cost of batteries that can replace the performance of ICEs.

Lithium-ion batteries, though today they must be hand-made and selected, can be used to manufacture high performance private cars with decent ranges, but the battery for the Tesla, which it is claimed will allow an electric vehicle (EV) to go up to 150 mph and have a range of 300 miles, costs nearly $40,000, and the Tesla equipped with this battery will cost around $125,000 at retail. No one today knows how to make EVs with a range of 300 miles and a top speed over 45 competitively with ICEs.

In the next 41 years, up until 2050, it is conservatively estimated that there will be a market for 4 billion personal passenger carrying vehicles. Even if they were priced at an average of (USD)$15,000 each in today’s dollars, this represents a total of $60 trillion of product. When you factor in fuel and maintenance the total probably comes to $100 trillion dollars. Surely this is the largest of the markets of the future, except perhaps for housing.

The auto industry will consume in the next 41 years between 4 billion and 8 billion tons of steel, at least 25 billion tires, as much as 2 trillion pounds of plastics, and typically, and very conservatively, will increase its usage from around 1 billion gallons of gasoline per day that are burned today, to more than 3 billion gallons a day by 2050, if 100% of the vehicles then are still utilizing ICEs.

Even if 25% of the vehicles being built in 2050 are EVs, or 50% of them are, the demand for hydrocarbons then, will dwarf today’s numbers.

This will happen unless the political and social costs of ICEs, calculated along with the price of liquid hydrocarbons as economic costs, exceed the cost of motive force derived by using batteries to power electric motors.

The large oil companies are betting that this will not happen in the time frame that glib politicians spout off about. They are correct. The development of cost effective alternatives to burning hydrocarbons to produce electricity has slowed own and may have reached a plateau.

Clearly the obvious and only replacement for the coal-fired power plants that today produce more than half of the world’s electricity is to substitute for them the rapid and massive construction of nuclear power plants the capacity of which is now 10% of the global demand. But the issue here is political and social, not economic, because, if it weren’t, it would already have happened.

This doesn’t mean that it will never happen, but it does mean that solar, wind, geothermal, and biofuels, which can only ever produce a small contribution to the global demand for electricity, will never happen without political intervention on a massive economic scale that I think can now never happen.

The idea of the Obama administration providing an incentive to develop alternate energy sources with $150 billion over 10 years, is surely hypocritical against the $1 trillion a year now spent by the global petroleum industry, just to look for and develop new fields and new sources of hydrocarbons.

Innovation cannot be bought with money alone. It can only come about after long term investments in the health and welfare and education of the masses of the earth’s people.

The development of alternate energy sources that can replace the huge volumes of energy produced by burning hydrocarbons and splitting atoms of uranium and plutonium, may well occur or indeed have already occurred, but the replacement of our current energy infrastructure and the means by which we utilize it, such as ICEs, will take generations and will be slow and deliberate.

Anyone who tells you differently is simply wasting their breath.

A low-key but growing and deliberate (re)turn to the development of thorium-based nuclear reactor fuel is underway globally. The legislative branch of the United States government has now joined in promoting this project, as it begins to look like the development and implementation of the use of thorium-based nuclear reactor fuels may well turn out to be the ideal exit strategy, for those committed to the replacement of the burning of fossil fuels as the principle method of generating electricity by sustainable and/or renewable sources of energy. Many of them have already realized that wind, solar, biomass, geothermal, tidal and the old standard, hydroelectric, cannot hold an economic candle to the proven success and safety – yes, safety – of nuclear.

Even so, many Americans are still concerned that the possible military applications of uranium- or plutonium-fueled reactors outweigh the positive effects of the total elimination of greenhouse producing gases and the reduction, but not elimination, of the need to rely in part, on foreign sources for uranium. The use of thorium is the answer to these concerns.

Thorium has three main advantages over uranium as a source of nuclear fuel:

1. It can be used to make a reactor that produces only a small fraction of the “waste” today produced by uranium/plutonium reactors;
2. It can be used to build a reactor from which it is difficult and even impossible to extract anything useful for manufacturing an explosive-type nuclear weapon;
3. Thorium can be produced immediately and in large enough quantities, in the continental United States, to make the country completely independent of any reliance on foreign sourcing, while producing electricity in sufficient quantity so as to make the burning of fossil fuels for that purpose unnecessary.

Just as I am writing this, which is an updated version of a report I originally drafted in November 2009, “The Reasons to Invest in Thorium Energy Inc.,” the United States Geological Survey (USGS) has released a must read report, dated March 25, 2009, for those interested in a safe and secure America, independent of reliance on foreign sourcing for oil to generate electricity. The report is entitled “Thorium Deposits of the United States—Energy Resources for the Future?” . The USGS scientists provide the data to prove the validity of the third advantage, stated above, of thorium as a power metal for generating electricity in the United States.

On March 16, 2009, a bill, HR 1534, was introduced into the U.S. House of Representatives “To direct the Secretary of Defense and the Chairman of the Joint Chiefs of Staff to jointly carry out a study on the use of thorium-liquid fueled nuclear reactors for naval power needs, and for other purposes.” In the Senate, a bill, S 3680, “To amend the Atomic Energy Act of 1954 to provide for thorium fuel cycle nuclear power generation,” which is officially to be cited as the “Thorium Energy Independence and Security Act of 2008” was introduced originally on Oct. 2, 2008, (110 Congress 2nd session) and we believe will be reintroduced into the new session of Congress (111 Congress 1st session) for 2009. Thus, for the first time in history, both houses of Congress are considering bills to authorize, fund and require the study of thorium fuel technology.

It is important to note that since the United States does not recycle nuclear fuel, no new fuel technology can be implemented without a complete study of its disposal. Because all known thorium reactor fuel cycles are believed to produce significantly less waste than uranium and/or plutonium fuel cycles, that the complete cradle-to-grave management of thorium fuel cycles is to be funded and mandated for study is an indication of a possible revolution in nuclear fuel technology. Once the waste management differential has been publicly quantified, it will be a powerful impetus to the use of thorium.

Thorium as a reactor fuel component, is already being studied actively in India, because India’s government believes that India has significant deposits of thorium, whereas it is clear that India does not have very much domestic uranium. China is also beginning to study thorium-based nuclear reactor fuels, and China does have significant amounts of thorium associated with its very large and currently exploited – for rare earths – deposits of monazite and bastnaesite.

However, China has only now begun to sequester the thorium-enriched residues from rare earth processing that until now were largely ignored. Both India and China want to develop thorium as a nuclear fuel component to conserve uranium and reduce their demand for foreign sources of uranium, as well as to take advantage of an asset that has been overlooked as an energy resource that is non-polluting and domestically available. These are exactly the same reasons that the United States is now looking at thorium. If the thorium programs in India, China and the United States are successful, each nation will be a customer for technology and thorium from the others, and it looks like the United States has more thorium than either of the other two major “competitors,” and perhaps as much as both of them put together.

A recent press release by Canada’s world-class nuclear reactor engineering and construction company, AECL, Atomic Energy of Canada Ltd., headlines “AECL Formalizes Strategic Agreement with China to Extend Nuclear Fuel Resources.” This press release contains the pregnant sentence “AECL has tested thorium-based fuels in its test reactors and in the Rolphton, Ontario NPD 2 CANDU power reactor.” There are also indications, in agreements and announcements, that Europe and the Middle East are actively exploring thorium-based reactor programs for the non-proliferative generation of electricity.

Thorium Energy Inc. is one of the first U.S.-based companies to participate in the mining of critical metals for the core areas of economic growth of the 21st century, energy and high technology.

Summary

The production and supply of the rare earth metals, and of a small amount of byproduct thorium, as of March 31, is under the absolute control of mining operators under the strict control of the government of the People’s Republic of China. The demand for the rare earth metals as well as their supply, from the PRC, has been steadily growing from the beginning of the 21st century as more efficient, economical and environmentally friendly uses for the rare earth metals have caused them to be substituted for older, less-efficient base metals, and also to be used ab initio as the critical basis — it cannot be done without them — of new technologies. Thorium, the use of which was much greater at the beginning of the 20th century than at its end, has now turned a corner as the world stands on the threshold of a new age of nuclear power generation, which includes thorium-fueled reactors that have less waste, almost no weapons capability, and a larger resource basis by many times than uranium.

Thorium and the rare earths are almost always found together for reasons of geochemistry. China, in fact, is where the world’s still small supply of thorium is produced today, in conjunction with China’s dominant role in the production, today, of the rare earths.

A supply crisis is looming for both thorium and the rare earths. To put it simply; China’s industrialization is demanding increased tonnages of the rare earth metals at a growth rate of 15% a year. It is calculated that in 2008 China utilized, domestically, 80,000 metric tons (t) of its estimated production, for 2008, of 132,000 t of rare earths. This is 60% of the world’s supply. At a growth for demand of 15% per annum China’s domestic demand is calculated to exceed its production of the rare earths by the end of 2013 in which year China’s production and domestic demand will reach just over 150,000 t per annum.

A recent highly-regarded study calculates the global demand for rare earths in 2013 to be more than 200,000 t per annum, so that unless at least 50,000 t per year of new production is established outside of China, then China will simply have total control in 2013 of all technologies and industries critically dependent on rare earth metals.

China, just this last summer, ordered its rare earth mining and refining industries to halt the bulk disposal of thorium and to accumulate it for a “future use.” Miners have now been ordered to hold thorium-rich concentrates until notified by the central government as to their disposition. It is therefore also the case, that unless rare earth production outside of China can grow to fill in non-Chinese demand for the rare earths, then there can ultimately be no large-scale thorium nuclear reactor revolution without Chinese acquiescence and thorium supply.

To resolve both crises of supply — that is, that of the rare earths — in the near term, and of thorium, for the long term, the ideal mining opportunity outside of China then would be one that has the best combination of thorium and rare earth deposits.

Thorium Energy

Thorium Energy presents an outstanding opportunity for U.S. involvement in the global economic development of the 21st century. The company controls one of the world’s best sources of accessible epigenetic high-grade thorium for the coming future of non-proliferative nuclear (electric power) reactor fuel and simultaneously controls of one of the largest and most accessible deposits, as of yet undeveloped, in the world of the light rare earth elements (LREE). Thorium Energy’s mineral deposits are all located in the western United States in Idaho, Montana and Colorado and are within, or close by, well-developed infrastructures of good roads, ample electric power and water. They are thus minable.

The thorium and rare earth deposits now owned by Thorium Energy were first discovered and surveyed just after World War II, by major power utilities and industrial companies answering the call of the Federal Government to map America’s critical resources, for a future then envisioned to be powered by electricity generated by nuclear reactors, fueled with not just uranium but also with more abundant thorium. It was also to be an immediately optimistic future, filled with labor saving and health improving technologies based on innovations derived from the properties of America’s abundant domestic resources of minor metals and rare earths.

Companies like Idaho Power and Tenneco spent the current inflation-adjusted equivalent of tens of millions of dollars to survey and analyze the Lemhi Pass and Diamond Creek regions of Idaho, and the Idaho Geological Survey and the then Bureau of Mines Division of what is now The Bureau of Land Management. What is now the USGS sent professional geologists to validate and resurvey every square yard of these privately surveyed claims to create a verified inventory, for the future, of important and critical to-be-developed natural resources. Beginning in 1988, when the first phase of mineral discovery and banking had run its course, Thorium Energy’s predecessors began mining the accumulated data, and using the information thus obtained to acquire the richest claims from the first wave of post World War II mineral inventory building.

America and the world entered into a second phase of mapping strategic natural resources, just after the fall of Communism in the late 1980s, when it became clear that the geopolitical upheaval and the crescendo of new technological developments would combine to produce a wave of Asian development, which would first create an infrastructure built upon base metals and then, following that, begin a massive development of demand for the minor, technology and power metals such as the world had never before seen. Indeed, this development of Asian economies occurred and grew faster than anyone could have or did predict. At this moment, in Spring 2009, the Asian juggernaut is taking a breather; it will resume its furious expansion shortly, because it has no other direction to go in the face of an immense population now aware of, and exposed to, the largest and most rapid expansion of their standard of living and quality of life in history.

America has so-far squandered its great opportunity, not only to become a global provider of natural resources but even to remain self-sufficient and independent. The United States, however, remains the engine of the world’s economy, but consumption rather than production of resources has transformed the United States into a massive debtor, and so, when the economy finally overheated and sank beneath the weight of overextended borrowers and a vanishing industrial base from which to create wealth through exports, the global economy caught a cold.

China’s growth, in late 2008, is predicted to be only 8-9 % in 2009 rather than 10.5 %, and this is somehow considered a catastrophe even as it allows a China holding $2 trillion of U.S. Treasury debt to force down the prices of all commodity metals sold to China, thus enabling China to reduce the prices of its exports of durable goods and thus be able to recover earlier than the U.S. economy. In this current pause in the 21st century economic development of Asia, as the world catches its breath, Thorium Energy offers a once in a lifetime opportunity for investors to acquire the ownership of a domestic American resource base of thorium, the nuclear fuel of the future, and of the rare earths, the premier technology metals, used critically, for environmental control, shale and tar oil catalytic conversion to liquid petroleum, magnets for small powerful electric motors, and batteries for hybrid vehicles.

In 2008, Thorium Energy released the results of the company’s thorough review of the existing mineral data for its claims, combined with its own commissioned re-surveys and analyses of key properties identified by its consulting geologists. The information presented at the SME annual meeting in Salt Lake City in February 2008, has now generated a revision in the statements and estimates of reserves and resources of both thorium and of the rare earths by the USGS. The revised Thorium Commodity Mineral Review for 2008 has already been published. Note also the Thorium section of the USGS 2007 Minerals Yearbook.

The Lemhi Pass, Idaho holdings of Thorium Energy is mentioned prominently in this latest revision of the USGS Mineral Yearbook as major locations for thorium ores. The same USGS publication also refers to and validates the resources and reserves of rare earths associated with the thorium in the Lemhi Pass deposits. This will be expanded and elaborated upon by the USGS separately, when the revision of the USGS Rare Earth reserves and resources survey for 2008 is published.

It should be noted that the discovery of major resources of thorium and the rare earths at Diamond Creek, Idaho, by Thorium Energy were reported too late in 2008 for inclusion in the above USGS reports. The Diamond Creek discoveries along with two more in Colorado were publicly disclosed at the SME in Denver, CO, in February 2009 by Thorium Energy’s geological survey team and publishable figures will be available shortly.

The significance of the revised surveys is that a key event for the revision of both was the release of its data analysis and continuing survey data by Thorium Energy. It should be noted also that even as the latest USGS Thorium Review (2008) went to press, the company is continuing to discover additional resources and reserves of both thorium and of the light rare earths on the claims it has staked in Colorado as well as in Idaho.

The USGS came to the conclusion that it was time to update its surveys of both thorium and of the rare earth metals, because the rapidly accelerating interest in the industrial use of both types of resources, has made both of them into prominent strategic resources for the economic health, not only of the United States, but also of the world. The most important uses for these resources are nuclear power generation using thorium, reformation of heavy crude oil into usable forms, the manufacturing of high power small permanent magnets that make powerful and efficient electric motors possible, and the manufacturing of rechargeable batteries for use in hybrid vehicles and to store the electric power generated by wind, solar and geothermal electric generators using the light rare earth elements (LREEs).

The above uses were all discovered in the past, immediately generating intense interest in the critical resources to make them happen, and then faded from the hype of sound-bite prominence as their long technological developments took place. Today, thorium and the REEs are entering into their industrial growth phase so that the technologies developed around them can be realized and put into mass production. This has already occurred for the REEs and thorium is now poised to enter its first period as an industrial power metal.

The data and analyses that follow show that Thorium Energy is the best possible investment for the near future, because that future will be defined by thorium and the REEs.

To calculate the gross revenue potentials from the resources and reserves of thorium and the rare earths already discovered and, for the resources validated on the Thorium Energy properties, it is of course necessary to predict the prices of the metals to be recovered.

The problem with predicting the prices of thorium and the rare earth metals is that you need a base from which to start. There is no exchange on which one can trade these metals, which means simply that all purchases and sales of thorium and rare earth metals are by negotiation. This means, as with the case of any item that is not traded on an exchange, that the prices of the metals are not at all transparent. They are not readily found or guaranteed, so that you cannot manage the risk of price volatility in these metals by simply buying an option contract guaranteeing the delivery of a specific amount at a specific time in the future at a price fixed now.

The primary practical reason that no options contract exists on an exchange for thorium or any or all of the rare earth metals, is that their chemical reactivity when pure does not allow for the easy storage of any of them in a simple way. This means that it would be difficult and expensive to warehouse such metals so that they could be delivered to fulfill an options contract in a specific physical form and grade of purity as are gold, platinum, palladium, copper, zinc, nickel and tin from warehouses operated by the London Metal Exchange. In addition, the prices of these metals up until fairly recently, were low, so that in the year 2003, for example, a ton of exchange-traded palladium was worth as much as $7.5 million, so that the total production of palladium that year, around 225 tons had a value of nearly $1.7 billion. By contrast, the entire value of all of the 80,000 tons of rare earth metals produced and marketed that same year was $500 million, and most of that value and tonnage, 85%, was due to just three — lanthanum, cerium and neodymium — of the 17 rare earth elements.

Another reason – this one economic – that thorium and the rare earth metals do not lend themselves to being warehoused for delivery is that there is neither a surplus of them nor a large enough number of producers or traders of them — at least not enough well-financed producers and traders of them — to support the expenses of an market on an existing exchange. This could change in the future, but not until the supply base is much more diversified with the addition of producers with large resources and reserves of thorium, LREEs or both.

In the following discussion we will use the thorium prices obtained by the USGS as published in its above-mentioned and linked surveys.

The prices of the metals we are looking at today, are found by locating the existing producers, traders and end users and polling them on the prices that they either charge or receive for their metals. This is how the USGS establishes prices, and it is also how the best professional metal news reporting services, such as American Metal Market, Metal Pages, Asian Metal Pages and Metal Bulletin discover prices. Of course, it is necessary when using such a method of price discovery, to take into account the veracity of such data, as it impacts competitive advantage. Nonetheless having taken into account the shortcomings of an opaque market, well-known rare earth metals’ consultant and analyst, Dudley Kingsnorth, has charted the history and current values of the REE prices as shown in the following table:

The above table was prepared in August 2008. The data for 2009 are not yet available as of this writing, but it is clear that the rare earth metals have not suffered the loss in value that the structural base metals, such as copper, iron, aluminum and zinc, have. The rare earth metals appear to have achieved a secular demand that is constant and growing. The rate of growth may change due to global economic conditions, but there has developed a constant base.

Before projecting where we think the prices for thorium and the rare earth metals will be in 2012-13, by which time it is believed that the economy will be well into a global recovery, let’s look at an estimate of the value of Thorium Energy’s resources and reserves today. The supporting data for the calculations below are available from Thorium Energy upon request in the form of three extensively detailed reports prepared by Rich Reed, PE, PG:

• Appendix A (Lemhi Pass detail for Thorium);
• Appendix B (Diamond Creek), and
• Appendix C (Lemhi Pass detail for Rare Earth Elements).

I am starting my calculation for thorium with the 2007 price for 99.9% thorium dioxide of $200/kg, as reported by the USGS Thorium 2008 Commodity Mineral Yearbook cited above. I realize that this price is unrealistic, because it is based on the small production of refined thorium currently carried out. Even if we factor in the large scale mining of thorium as a factor in reducing its price, we must take into account that the only metal with which we can compare thorium is uranium, which is today mined in fairly large quantities and which has sold recently for as much as $100/lb. Considering that deposits containing accessible amounts of thorium are in fact more common than those of uranium by a factor usually cited as three or four times, I am going to use a figure for thorium as a base for nuclear fuel of $25/lb.

For the rare earths today, it is not the price of the individual metals that is important in the table below but rather their distribution, and this varies according to whether or not the ore body reports mainly the low-weight rare earth elements (LREEs) or mainly the heavyweight rare earth elements (HREEs). The table above showing the comparative values of the various distributions in one of the currently known deposits in Canada, and of the Lemhi Pass ores of Thorium Energy Inc. offer valuations from $16,000 to $33,000/ton, which is to say from $7.30/lb to $15.00/lb based on February 2008 pricing for the concentrates of mixed rare earth oxides (REOs) sold, or that would be produced and sold from the various distributions in the ore bodies at the two sites. I will use $10/lb as an average price for the REO concentrate that could be produced by Thorium Energy. This figure is very conservative.

Thorium Energy is not finished exploring its claims in the Lemhi Pass and Diamond Creek regions, and fully expects that the above statements of the total of indicated resources and inferred reserves to be conservative.

It is apparent that the Thorium Energy  indicated resources and inferred reserves may well constitute the largest such deposits in North America for the rare earth elements, and certainly are the largest deposits of high-grade thorium in North America, if not in the entire world.

This company also has a large additional body of claims in Colorado, on which substantial deposits of thorium and the rare earth elements have been verified. The company is now in the process of establishing the indicated reserves and inferred resources of both thorium and the REEs on the company properties based on the results reported at the SME in Denver, CO, on February 26, 2009.

As to future pricing of both thorium and the rare earth elements, it is clear that no matter what projects are advanced to production or begun outside of the PRC, it is the pricing established by the PRC that will dominate the thorium and rare earth space for the foreseeable future. It is clearly reasonable to assume also that both of these materials will be priced directly in renminbi rather than dollars in the near future so that not only will market fundamentals determine the future prices of both types of materials but also foreign currency exchange rates. Thus, the rumblings by China that it may not use the U.S. dollar as a benchmark or reserve currency are, in fact, positive for those who hold natural resources, which are priced by the Chinese through their dominance of a market.

The experts forecast that, by 2013, the prices of thorium and the rare earth elements, in U.S. dollars, will have doubled from their 2008 levels. Thus, the contained value of the indicated resources and inferred reserves of thorium and rare earth elements – in just the claims in the Lemhi Pass and Diamond Creek regions – would be approximately $45,000,000,000.

Each percent of the total value of Thorium Energy ’s indicated resources and inferred reserves would be $450,000,000.00.

The company believes that an independent verification of the resources and reserves, and the application of known methods of mining and concentrating the currently known grades of ores, would result in a high percentage of the total resources and reserves being judged accessible and economical. Even if this proved to be only between 5% and 10% of the total, the Thorium Energy claims would have a value now of as much as $2 billion now and $4 billion by 2013.

If you have questions or want to request the detailed data for Thorium Energy’s claims, indicated reserves and inferred resources, please email kennedy200@sbcglobal.net, the company’s Communications Coordinator. Note that at the moment, Thorium Energy is a closely held private company.

I urge you to read the new article from Mr. John Petersen called “Why Long Range EVs Can Never Be Cost Effective“, a thorough and comprehensive survey of the current state of lithium-ion battery technology development as it relates to the electrification of motor vehicles for private passenger-carrying use. When you are done with that, I urge you to read the associated article by the same author, entitled “Li-ion Battery Manufacturers: The Bleeding Edge of Energy Storage Technology”.

After reading both articles please tell me why there is any argument supporting the use of tax dollars to develop lithium-ion batteries, or engineering methods to mass produce them, if the sole purpose of that development is to power electrified vehicles, such as plug-in hybrids or battery only propelled motor cars for private passenger-carrying use?

I believe that the future of the electrification of motor vehicles for private use will be a mix of battery and internal combustion technologies for a very long time to come. I believe that whether or not privately owned passenger-carrying motor vehicles are mostly entirely battery powered, mostly hybrids powered by batteries and internal combustion engines (ICEs), or mostly powered only by ICEs, depends exclusively on the progress of the world in replacing the fossil fuel burning generation of electricity, with nuclear reactor-based generation of electricity.

Until such replacement has occurred. the cost of electricity will simply continue to go up until there is a critical shortage of electricity to produce and recycle base metals. and the mass production of technology metals has become prohibitively expensive.

If the nuclear replacement of fossil fuels occurs, then the generation of hydrogen by the electrolysis of seawater could make hydrogen universally and economically available enough to be used to fuel ICEs with only water as an exhaust.

In the meantime the critical driver for the electrification of private passenger-carrying motor vehicles will be COST. The political issue of reliance on foreign oil is after all ultimately one of cost and the risk of supply interruption. The so-called greenhouse gas emission reduction issue will shortly fade away, in the face of the increased COST it brings to our society without any obvious near term benefit.

As Mr. Petersen points out so well, we have already reached the bleeding edge of energy storage technology – the point at which increased spending brings decreasing or no valuable results.

In the near term, we will produce as many hybrids powered by nickel metal hydride batteries, as the rate of production of their critical raw materials and its percentage allocation to battery production allows. This I think cannot exceed 5,000,000 Toyota Prius-sized vehicles per annum.

A small number of small, limited range plug-in hybrids using lithium-ion batteries will be built, but I think that they will be supplanted rapidly by modern lead/carbon -acid battery powered vehicles, which are far more economical for short range, limited load and limited performance vehicles than expensive lithium-ion batteries.

Ultimately I think that the far more economical lead-acid batteries will be widely used for short range vehicles, and longer ranges will be obtained with nickel metal hydride hybrid systems.

There can be no shortage of lead based on currently known resources and reserves of that metal. If there is a serious need for longer range hybrids, then nickel metal hydride will be joined by lead-acid using systems.

As soon as this future trend is realized there will be a massive interest in recycling minor metals, such as the rare earths, so as to try and completely eliminate their waste.

Ideally a future driving world would be one where hydrogen-fueled ICEs are allied with hydrogen-using fuel cells, lead-acid batteries, and nickel metal hydride batteries in various combinations, and every component is made with recycling and rebuilding in mind from the start.

As a mass-produced energy storage system for private passenger-carrying motor vehicles, I think that lithium-ion batteries are a dead end.

I do agree with Mr. Petersen, however, that the wealthy and adolescent (wealthy ones only) may always drive foolish toys such as the Tesla, to show off their wealth by demonstrating that they can afford private vehicles powered by hugely expensive, hand-built lithium-ion batteries.

Let the braying begin as the era of interest in lithium peaks and begins to subside.

Although thorium is not today mined in the USA commercially, the US House of Representatives had placed before it on March 16 of this year, last week, a bill sponsored by Mr Joe Sestak (D-Pa) directing the US Navy to study all aspects of utilizing thorium in reactor fuel for shipboard propulsion. Rear Admiral Sestak (Ret) is the highest-ranking former military officer currently serving in the House of Representatives. Last month Senators Hatch and Reid introduced into the Senate, a bipartisan bill to amend the Atomic Energy Act of 1954 to authorize the Nuclear Regulatory Commission (NRC) to study thorium fuel configurations, and to fund such studies. There is certainly a lot of activity in this session of Congress with regard to a metal, which although the US has in abundance, is not mined here at all.

At the very beginning of the nuclear age it was well known that there were two naturally occurring elements which could be utilized to construct nuclear (controlled fission) reactors, uranium and thorium.

The first use for such reactors however was to breed plutonium, which it had been determined was the more practical of the two best studied known fission weapon explosives, uranium 235, and plutonium-239.

The United States alone had by 1960 constructed nearly 20,000 plutonium based nuclear weapons, and it wanted to conserve its supplies of uranium, as did the Soviet Union. Both countries however believed that global dependence on oil imported from politically unstable or immature states could not be relied upon as a safe source of electricity for civilian consumption. Both nations therefore were interested in looking at thorium as a fuel base for civilian reactors to be used solely to produce electricity.

Between 1960 and 1980. the USA constructed or revamped several reactors to test thorium-based fuel configurations. The Soviet Union is believed to have done the same thing. Both nations had the idea that thorium reactors could be, among other things, given to less developed nations so that those nations could not use such reactors to construct nuclear weapons, yet could be made politically and economically dependent on their benefactors both for reactor technology and maintenance and for the fuel and its disposal.

However, by the mid-1970s, it was obvious that politically, the expansion of nuclear power for civilian use was doomed due to the strong opposition of environmental as well as antinuclear activists, none of whom were interested in the facts about reliance on foreign oil or the reduction of the emissions from fossil fuel plants.

It was well known in the world nuclear industry by 1975, that thorium-based fuel could be utilized to dramatically reduce the waste volume from nuclear plants and that such reactors could be seeded with plutonium-239 from dismantled weapons, which in the operation of the reactor, would be rendered difficult or impossible to be utilized for further weapons construction. Nonetheless the development of such reactors under government funding and sponsorship ended in the early 1980s. In the USA, no nuclear reactor fuel can be used without being certified first by the NRC and no further funding was available to do so, so commercial development of such fuels was effectively terminated.

It seems that now, a generation later, with the world literally awash in plutonium from decommissioned weapons – there may be as much as 1000 metric tons of bomb grade plutonium just from decommissioned weapons – and with a growing belief that the supply of oil cannot keep up with the demand and that carbon dioxide emissions from burning fossil fuels are reaching critical levels affecting the world’s climate, it might be a good time to revisit thorium as a non-proliferative (plutonium burning), low waste production, seemingly-abundant nuclear reactor fuel.

The U.S. Congress certainly is almost on top of this one. Funding the NRC to test fuel designs, and authorizing the Navy to compare and contrast thorium reactors with the uranium/plutonium reactors currently in use, is an excellent way to get the job done. I commend the Congress for these actions.

One caveat, however; there is not today, nor has there probably ever been, a primary thorium mine. Thorium has been and is being recovered, in small amounts, as a byproduct from rare earth mining and from uranium mining.

It looks like there is a very large deposit of thorium in the Lemhi Pass region of Idaho and Montana. This deposit must be developed now, because if we are second time lucky with thorium reactors in the USA, and we have developed the deposits in Idaho and Montana, then the US will be self-sufficient in the production of electricity that does not require burning fossil fuel, and does not produce greenhouse gas emissions at all.

If the Lemhi Pass deposits are, in fact, as large as they seem, America can develop a new industry that sells thorium for reactor fuel to nations that have already shown an interest in such developments including India, Norway, China, Russia and even Canada. It looks to me as if it may be cheaper to produce thorium here in the USA, than it will be to do the same in India or China, which have large but diffuse deposits of thorium, contained in rare earth and heavy mineral “sands.”

And, last but not least, the US Navy will be able to build, use, and fuel reactors from resources entirely within the confines of and under the control of the United States of America. What a great idea!