http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=afImIIhujT9g

” In other news, I recently just returned from the Bokan Mountain project in Alaska, owned by Ucore Rare Metals (TSX.V:UCU). If I had both the capital and the stamina I would buy Bear Lodge and Bokan Mountain and produce from them the entire range of rare earth elements (‘lights’ and ‘heavies’) in amounts that would satisfy US demand in total. With the surplus I would export to Asia the heavy rare earths that the Chinese, Japanese, and the Koreans need today and increasingly will need in the future. I would construct two separation plants, one at each location, and one refining plant to serve both.

The USA would then be independent of the need for foreign sources of all of the rare earth metals, and its rare earth permanent magnet industry could be restarted.

In the near future I will tell you about my trip last week to Bokan Mountain, and my discussions there with Jim Barker and Tony Mariano, on the sites of some of the richest samples of heavy rare earths in the USA. The extent of those minerals and an appropriate metallurgy is to be determined, but I think that Ucore’s deposits, when fully explored later this year, could make the USA independent of the rest of the world for its heavy rare earths. ”

http://www.barnswood.com/tmr/wp/2010/08/some-thoughts-on-rare-element-resources-bear-lodge-project/

Regan,

I have seen literally dozens of presentations by rare earth juniors over the last few years. I remember that I saw one in 2005 by Lynas, into which a company then called Sinogold had been morphed. That business model called for ore to be shipped to China for concentrating and processing.

As of today, it is my understanding that the current Lynas has at least the first year’s ore now above ground and awaiting the completion of a concentrating plant in Australia. That concentrate will be shipped to Malaysia, it is my undertsanding, when the Gebang operation is ready to receive it.

Only when the actual ore concentrate begins to run in the new not yet, as of this date, built separation plant will Lynas know if the process “scales up.” Then if it does scale up, only then will Lynas know how efficient its separation and purification processes are.

I have been the CEO of a chemical engineering/manufacturing operation, which was an automotive supplier, and I can tell you that Robert Burns would have made an excellent ore processing analyst, just from the fact that he said that the best laid plans of mice and men often go astray.

I weigh cost figures in company presentations carefully and assume they are wildly optimistic. Be aware that every institutional investor and every analyst does the same. It is predominantly small investors and company representatives that tell you that a process technology is “well-known” or that “they have a new process that solves the old problems” or that “their ore is just like that at Bayanobo and thus its process technology is well known.”

The evolution of Lynas’ presentations over the last decade shows that the company’s understanding of the rare earth mining problem was evolving. If you are certain that Lynas is now all set and all chemical engineering problems can be solved simply by stating that they are solved then, unless there is a currency inflation, or a strike or civil unrest in Maylasia or the Chinese, who clearly know how to do it, ramp up production then Lynas will have solved the world’s rare earth supply problem if there is an impending future shortage of lanthanum and/or neodymium.

Don’t forget that Lynas has also announced that “it is developing” nearby deposits that analyse for significant quantities of heavy rare earths. Perhaps then after the current deposits of light rare earths are brought into production, then the totally different ore bodies containing the heavy rare earths can be brought into production in another plant built on the Gebang site someday, and the “projected” shortages of heavy rare earths, which, in fact, seem more imminent to me than those of the light rare earths, will be solved providing that Lynas’ technology works economically. Or maybe someone else will bring a heavy rare earth operation into economic production first, and so on, and so on.

I still think that there are too many large scale rare earth mining operations being developed and that almost all of them are deficient in the key heavy rare earths, dysprosium and terbium.

The market will sort them out through the brutal process of the survival of the profitable.

If this is true; then the way our world is going increasing demand for REE’s will continue.

It will be first to production wins as companies may well have to sign long term agreements just to guarantee supply. To bet on small explorers at this stage is really betting that one of the larger ones will fall over, this is a brave punt (remembering that if it looks like an oversupply money will dry up).

China has shown, imho, that they are prepared to use REE’s as a leverage tool and they are not taking (or attempting to take in Lynas) stakes in majors for fun.

Having met the ECE people, I am firmly of the opinion that China Inc does want to try and manage global supply of REE’s.. the reality in my view is that the market will compete very hard to try and lock their own controls and the smartest way is to take stakes in some of the key players; this is where the action will be.

We also need to look back at Uranium a few years ago and the market reacted in supporting those with the earliest and most likely projects.

Thanks for your reply, you stated that you are open to further analysis of official facts and figures.

In contrast to your broad sweeping statement “These ventures all have one thing in common, which is that most of the money required by all of them is admittedly required just to produce ore concentrates.”

I am using Lynas Corporation Limited as an example as they are the most advanced and have the most accurate figures in the public domain. From slide 35 & 36 from the Lynas Presentation at the JP Morgan Australia Corporate Access Days, New York; http://www.lynascorp.com/content/upload/files/Lynas_Corps_J_P_Morgan_Presentation_September_New_York__FINAL.pdf.

You can see a breakdown of the costs involved in producing a RE concentrate and those required to further process this material into higher value, separated and higher purity rare earth inorganic chemicals. Both Operating costs and Capital costs are shown. The vast majority of these costs incurred arise from further processing of rare earth concentrates to specific rare earth chemicals and not those associated with just producing a low-value concentrate.

Also in rebuttal to your opening statement of your original text, “Today’s announcement by Arafura Resources”, which then contains a hyperlink to a 3rd party article written by an author at Bloomberg. This is not an announcement by the Australian-owned and Australia-based rare-earth mining venture, Arafura Resources Limited! This is an article by Bloomberg employee, Jason Scott.

I am not concerned with any analysts specific opinion towards their own interests. It is human nature to “talk one’s book”, at least Mickey Fulp says it directly and associated caveats.

What concerns me, is the basic misrepresentation of reality, either intentionally or unintentionally, by senior, respected consultants in the sector. This is especially true when you are in a senior position and other media sources without your natural levels of due diligence are want to use what you say as fact rather than as an individual’s personal opinion and further propagate the spread of mis-information.

Regards.

I’m not sure if the market doesn’t want to invest in a Western REE value chain, though I do think the market really has a hard time to understand this whole REE-business. You only have to look at the differences in market cap of MCP/AVL/NEM/GWG to see what I mean. IMO there’s still a lot of work to be done for people like Gareth, Jack and others who know what they are talking about.

When I use my knowledge of eco 101 in the REE-sector I always say to myself: “Kris, be careful, the market can stay irrational longer than you can stay solvent and the REE-market won’t be an exception…”

Wendy D (and everyone else)

Thank all of you for your commentary. Wendy D is, from my point of view, entirely correct. I try to take a holistic approach to my sector analysis. TMR is not biased towards any one company or any one approach to developing a business. We, the two founding principlals, operate by a single principle, which is that we are first and foremost an information site and that any analysis of our own or of anyone else published on this site will always be signed by the analyst who will always be required to tell all of us if he or she is being paid in any way by any person or company mentioned or implied in the analysis.

By the way being paid does not necessarily imply being biased. The disclosure is just another factor that a reader can utilize to judge the independence of an analysis for themselves.

I for example sincerely believe that at this moment too much money is chasing the large REE projects and too little the smaller ones. I think the emphasis is on the wrong rare earths. If this is a bias then I am indeed biased in my belief about what the future direction of REE production outside of China should be.

Ad hominem (i.e., personal) attacks do not phase me or merit a response. Disagreements with my conclusions based on numerical data or market intelligence are always welcome. I can and do change my mind when strong evidence of an appropriate kind is produced against my position. I ask you for the courtesy of doing the same.

Thanks for reading

Jack Lifton

You may be here to promote your own little pet, and I am happy with the progress of my little pet.

But Jack gives the overview which it is so easy to miss when focusing on just one or two REE juniors.

And at the end of the day, concentrate is concentrate and even refined and separated rare earths are only refined and separated rare earths. What we are missing in the west is not just supplies of rare earth elements and metals, but the added value supply chain which turns the REEs into something useful. The US used to have it all. They let it go because it was so easy to just buy from China….and now there is very little expertise left outside China to make useful things out of REOs and REEs. And THIS is where the profit is. Added value.

So forget the concentrate producers. You might equally forget the separated REE producers, because most of their market is in China.

What we need to be looking for is value add all the way down the line – the way it USED to be done in the US: mining, concentration, separation, manufacture.

Only one of the current crop of REE hopefuls can do it. Just ONE. And even that one struggles for funding, because no-one believes what they are doing is of any real significance.

And in the same market which reckons that Molycorp was too expensive at its IPO, what hope do any others have?

The West really ought to wake up. They really shouldn’t leave it until TV goes back to black and white, the Prius is no more, power stations have no option but to use fossil fuels and Blackberries are a thing of the past…

I’m not debating any figures as none have been released officially by the company via the ASX platform. The total economic cost of a project and the breakdown into ARU-spend and other stakeholder-spend is totally unknown and will not be known until an official ASX release is made. A 3rd-party news story is not an official company release and JL should know that.

Just as the latest 100’s of stories about Japan and Chinese diplomacy are not missives of the respective countries. They are 3rd party representations of here-say, of various levels of reliability.

Regards

http://www.arafuraresources.com.au/
I see a A$1 billion headline there right away…. Maybe the company itself should be more careful to avoid misunderstandings? I agree with your 3rd alinea though.

Regards,
Kris