In the rare-earths sector a very important and under-reported story is coming to the surface. A senior executive at a rare-earth junior said to me at PDAC in Toronto earlier this week that the 800-pound gorilla in every rare-earth venture’s room, was the radioactive thorium- and/or uranium-bearing waste that will be generated by the extraction, separation, and refining operations that are the supply chain steps immediately following mining and mechanical concentration.
It is my understanding that Lynas’ first business plan for the Mt Weld operation put out in 2005 called for only raw ore to be produced in Australia. Every further step in the supply chain was, in that plan, to be done in China, and, at the conclusion the idea was that China would either ship finished rare-earth metals to Lynas’ customers or buy the rare-earth metals at that point or earlier in the supply chain from Lynas. This original Lynas plan faltered on the failure of the Chinese to give guarantees that the ore would remain the property of Lynas, after Chinese work product was added to it. Chinese law on the ownership of natural resources by the State was not specific on when such ownership vested if the goods were imported, and this made institutional investors gun-shy of the project.
One of the major advantages of Lynas’ original plan was that any radioactive residue would have been a Chinese disposal problem, and in those days the Chinese were more flexible about that than they have now become.
The story upon which I am commenting is not going to go away, and in order to estimate the probability of success of any rare-earth mining or processing project, it is necessary to decide what weight to give to the problems arising from the necessity to obtain a legal permit to dispose of or store radioactive waste in the country involved. One should not be fooled by the idea that some countries are ‘third world’ and so care little for the health of their citizens, when measured against jobs to be gained from a project. This is no longer true!
I believe that thorium is going to be an asset not a liability as the public realizes that uranium-enhanced thorium reactors (the real name of the so-called ‘thorium’ reactor fuel) can be brought into operation and sharply reduce or eliminate the ability of the end-user of such a reactor from building fission based nuclear weapons. Certainly the Chinese, Indians, and Russians are already moving in this direction. Atomic Energy of Canada, has, in fact, I’ve been told, successfully demonstrated the conversion of its iconic CANDU reactor type to uranium-enhanced thorium fuel. Also, if a rare-earth mining/refining operation can produce uranium at below market cost, then it will be able to sell such production immediately into the world market.
To summarize: Any rare-earth mining and concentrating operation must increase the radioactive content of the concentrate over the mineral in the ground. So the issue of allowable radiation levels will need to almost always be addressed.
The environmentalist in Malaysia and Australia seem to be on the warpath. Can Americans,Canadians, Greenlanders, Namibians, and South Africans be far behind?
This problem is universal, and I am not trying to highlight a “problem” unique to Lynas.
The issue can be solved; and when it is successfully solved, it is a basically matter of added cost and increased time to get licenses. Time and money are the solution here as they are in every one of our endeavors.
Disclosure: At the time of writing, Jack Lifton holds no stock positions in any of the companies mentioned above.
The nuclear disaster unfolding in Japan will have long-term effects on the prices of uranium–the commodity, the miners, and the construction industry. What impact will it have on the rare earth subsector?
The nuclear problems in Japan will bring us to the conclusion that the power plants from all the big companies are not inherently safe but can and will be upgraded:
Why not passive cooling (after-heat only) in case of an accident?
Water to be stored ontop of the reactor and released by heat or pressure activated diaphragms?
Why not adopting the technology from any modern cars battery that caltalytically reburns hydrogen with oxygen to prevent overpressure?
Some of the existing coal- or oil-fired-power-plants will be refurbished to burn gas cheap now because of shale-gas and rising transport capacity for LNG.
Maybe also reinventing the Canadian CANDU and its seedlings (by the big four) that is much safer but might have suffered damage from.such a big earthquale too.
Anybody sincerely interested in this should dig the proceedings of the ICENES biannual conferences. (International conference on emerging nuclear power systems).
So after some years of hesitation (i assume) that building new reactors will happen once more. If conventional type then needing a lot more Uranium compared to heavy water moderated CANDU type. Conventional reactors need 3.5% enrichment and don’t burn thorium or radioctive (high-activity) waste. CANDU type needs only 1.5% enrichment and can burn thorium and the bad part of radioactive waste (if separated from the fission products) Enrichment is much more costly then the orignal natural uranium.
Back to rare earths: the stored thorium and the byproduct uranium will naturally dampen the up-going price excursions.
Workers in uranium mines were allowed 1mg intake per year – I don’t know if this figure is still valid.
This is similar to allowed uranium in drinking water recently discussed in Europe and set now to 10µg per liter – much too much for my thinking.
Dust prevention in REE mines will need a lot of water and closed crushing and grinding facilities. Not a big problem today except maybe deep in some deserts and for low grade deposits.
As always very good insight and comment. I thought that Great Western had already been granted their thorium storage permit by South Africa? I will reseach this next week.
Thanks for a most informative article, but I believe that you have only scratched the surface of the thorium “gorilla”. There is much more to come, as we see presently with the Lynas plant in Malaysia not (yet) being awarded an operating licence because of radioactive fears in Malaysia, and that Lynas have been remarkable coy about down-playing (= not mentioning) the radioactivity of their ore concentrates into Malaysia.
IF you are correct that “thorium is going to be an asset, not a liability”, what sort of time frame are you loking at for this?
And, if this is so, who are the buyers of thorium oxide or hydroxide out there? A list of these companies would be useful info.
Jack, how correct you are. It should also be mentioned that the only non-Chinese, near-term producer with a thorium storage permit is GWG – Great West. Ironically, another company not 150km away from them in Namibia, has a very similar market cap, lower grades, and NO thorium storage permit.
I too believe the market will eventually view thorium as potentially a positive by-product, but at this juncture, it is not the case. Hence one had better do their due diligence and look for locations either with thorium/uranium permits or in a nuclear friendly jurisdiction.
Hope all is well Jack – likewise to Gareth
Sorry what I should have said was “150km away from GWG close to the Namibian border” apologies
I’m glad this issue is finally being addressed by rare earth industry representatives, as thorium/uranium storage and processing has not been addressed by many analysts or companies.
I have been reading a booklet by the International Atomic Energy Agency (IAEA) titled, “Communications on nuclear, radiation, transport and waste safety; a practical handbook” in order to better address investor questions on this issue of radioactive storage and processing. It’s a bit of a dry read, but I highly recommend any serious RE investor to read something like this before making their investments. I think we can all agree, there will be multiple properties around the world that will get permitted due to radioactivity. Additionally, best practice control mechanisms will need to be thoroughly tested before any scaled production can take place. Unfortunately for the RE sector, this is going to add to the timeframe to reach production.
This issue will also add to the cost of developing a REEs mine. A small problem in a tough jurisdiction with strict regulations and enforcement can also mean delays through litigation by private parties in some countries.
Dear Mr. Layton
I happened to be doing some research into thorium and neodymium. I read somewhere I believe that a CANDU thorium reactor uses neodymium and also produces it. Does that sound correct? If true, what would be the figures for a large scale project? Thanking you in advance.
D. Carlton Rossi
I doubt that a CANDU reactor can use neodymium as a fuel as it is neither fissile nor fertile. But it is very likely that it is used in some form of magnet somewhere in the reactor.
AS for producing, every single nuclear power plant produces neodymium as it is a fissile product. But so far i’m not aware of a single reactor world wide that separates spent fuel for something else than plutonium. Before it will be economical to separate out the neodymium other fissile products will be done most likely as Xenon for example is easier to extract.
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