New Canadian Network to Push Rare Earth Mining

Canadian rare earth explorers, like those in the United States, Australia and Africa, are hoping to break the monopoly that China has on the metals used in everything from the latest smartphones to wind turbines and missile guidance systems.

Now those companies are getting some assistance from the Canadian government with the formation of a new association called the Canadian Rare Earth Elements Network (CREEN).

Launched at the REE Symposium in Montreal at the end of October, the industry-led network will advance Canada’s rare earth sector with the goal of producing 20 percent of the world’s demand for separated critical rare earth products by 2018. It will also engage in research and development, facilitate partnerships with national and international organizations, and support education and training initiatives to achieve the sector’s labor needs, according to a press release issued by Avalon Rare Metals (TSX:AVL), whose energy and market advisor, Ian London, will chair the CREEN board.

The announcement coincided with the approval by the federal government of Avalon’s Nechalacho rare earths mine in the Northwest Territories — which would be Canada’s first rare earths mine (see company news below).

Epoch Times quoted Avalon president Don Bubar as saying that Canada is uniquely positioned to become a world leader in rare earth development due to its deposits of high-grade heavy rare earths.

“We felt that Canada needed to make a strong statement internationally that it was interested in supporting the emergence of the rare earth industry in Canada and saw it as important,” said Bubar, adding:

“The ultimate solution on building out the supply chain outside China is going to involve participation from players in a number of different countries working together.”

Canada’s rare earths are worth $206 billion according to a Chamber of Commerce report mentioned by Epoch Times.

Company news

Bernard Valcourt, Canada’s minister of affairs and northern development, last week gave federal government approval to Avalon Rare Metals’ Nechalacho project, located about 100 kilometers east of Yellowknife in the Northwest Territories. The Mackenzie Valley Environmental Impact Review Board in July recommended that the project be approved, subject to conditions in the environmental report. For the mine to proceed, Avalon will need to secure operating permits and raise $1.6 billion, reported CBC News, adding that there has been opposition to the project from local First Nations groups.

Molycorp (NYSE:MCP), the US company operating the Mountain Pass rare earths mine and processing facility in California, last Thursday reported a third-quarter loss of $65.5 million, with revenue falling to $149.1 million compared to $205.2 million in Q3 2012, Reuters reported. The news outlet quoted Constantine Karayannopoulos, the company’s interim CEO, as saying that the second quarter was the “worst quarter we have seen in recent memory.” However, Molycorp also said it believes that a Chinese crackdown on illegal mining and smuggling of rare earths has helped stabilize demand and prices for rare earths, which are recovering from historic lows.

Metal-Pages reported that Hastings Rare Metals (ASX:HAS), an Australian rare earths company, is considering processing its ore in Asia as a way to derisk the project. The company’s mine, located in Western Australia, contains 85 percent heavy rare earth oxides, including dysprosium and yttrium, along with zirconium, niobium, tantalum and gallium. Hastings formed an alliance in September with an undisclosed strategic partner with access to capital and processing technology, Metal-Pages said.

China trials REE exchange

China’s first national trading platform for rare earths was given a trial run last week, according to a report in CCTV.com. The website said the Baotou Rare Earth Products Exchange will handle spot trading for rare earth products, though it will not yet offer futures trading.

Price update

The general consensus from rare earth market observers seems to be that prices for some rare metals have increased this past week. According to Metal-Pages, more suppliers are raising their offer prices for some REEs and are reluctant to sell stocks. The publication said 99 percent praseodymium/neodymium oxide was being sold for RMB335,000 to RMB340,000 a tonne, while 99 percent dysprosium suppliers were offering RMB1,900 per kilogram and some were holding out for RMB2,000/kg. Europium suppliers have also increased their prices to a range of RMB4,700 to RMB4,800/kg. However the price of Chinese yttrium oxide declined 6.9 percent, 45 percent cerium carbonate FOB China was down 8.9 percent, and 99 percent cerium oxide slipped by 7.6 percent.

Metal-Miner reported last Thursday that its monthly rare earth index is “planning for a bull market,” noting that some of the metals comprising the index have retained price support – specifically neodymium, neodymium oxide, terbium, europium, and dysprosium.

Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article.

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Is Avalon on Track to Build Canada’s First Rare Earth Mine?