Rare earth ore becomes a capital resource and another resource product

As a functional material, rare earth minerals, with the transformation of economic development methods, are becoming another resource product for the capital.

From "Las Vegas" in Las Vegas starting forward along Interstate 15 southwest across the Nevada and California border is not far, is the Mountain Pass mine (Mountain Pass), mine workers are Stressful construction.

The Mount Paz Mine is adjacent to the Majove National Nature Reserve. According to its Molycorp company, the rare earth mine is the largest rare earth mine found outside China. The existing reserves of rare earth oxides are estimated at about 960,000. Ton, the cut-off grade is 5%. If the annual output is calculated to be 19,090 tons, the mining period will exceed 30 years.

From the mid-1960s to the end of the 1980s, the Mountain Pass Mine was once the world’s largest source of rare earths, but it was suspended for five years from 2002 to 2007. Although mining was resumed at the end of 2010, the scale is still not Big. However, the Molybdenum Company has already stated with ambition that the company is fully operating. It is expected that the annual output will increase to 19,090 tons before the end of 2012, and production will double before the end of 2013.

The story of the Mountain Pass Mine is the epitome of global rare earth market changes.

Ups and downs

Discovering the Mountain Pass mine is almost accidental. According to the California State Polytechnic University, in 1949, two explorers took the borrowed Geiger counter to search for uranium, and when they reached the vicinity of the mine, the instrument showed a radioactive reaction. So the two sent samples to the US Geological Survey for analysis. It was identified as fluorocarbon bastnasite. Because it was not the uranium mine that we were looking for, the rare earth was not yet used on a large scale, and the value was not high.

However, the United States Geological Survey conducted a detailed investigation of the area the following year and discovered that there are a large number of non-radioactive cesium ore deposits in the vicinity, also known as rare earth ore. Above Surveyor has worked in a molybdenum mining company formerly known as the United States molybdenum company (Molybdenum Corporation of America), he foresaw the possibility of rare earth in the future will be a huge development prospects, so she suggested the company bought 220 acres this piece of mine.

The initial production of the Mountain Pass mine is small, but with the booming color TV industry in the 1960s, the demand for thorium as a phosphor in rare earths has greatly increased. The mining area installed a new concentrator in 1966. The mine's annual output of rare earth oxides exceeds 12,000 tons, almost monopolizing the supply of rare earths in the United States, and occupies more than 60% of the global supply of rare earths, making the United States replace South Africa as the largest in the world. Rare earth suppliers. In 1977, the renamed molybdenum company was purchased by Unocal.

However, after the 1980s, the world’s largest supply of mines was severely challenged by China.

Jim Hedrick, who previously worked in the United States Geological Survey on rare earth research, recalls that before China entered the rare earth market, a good-purity oxide was about US$100 per kilogram, but with the addition of Chinese suppliers, prices fell first. To 20 US dollars, then further reduced to 4 US dollars - 8 US dollars. "I can't believe they can make a profit from it. Some people are forced to leave the market," he said.

The rare earth industry expert Jack Lifton of the American Metal Technology Research Institute also stated that because Chinese companies saw that the rare earth market is expanding, in order to seize the market, it is normal to take measures to reduce prices, but the problem is that the price of Chinese rare earth is even low. After the cost of the United States.

Despite the impact of Chinese companies, the Mountain Pass mine is still struggling to support production in 1997, still maintained at around 10,000 tons. However, the environmental pollution accident in 1998 made the mine's continuous operation difficult.

Due to its location in the mountains, the Mountain Pass mining area needs to pump water from a nearby nature reserve. In 1998, thousands of gallons of water carrying radioactive material were dumped into the lake of Majove Reserve during the process of washing the tailings pipeline. During the investigation, the U.S. government found that there were a total of 60 molybdenum companies from 1984 to 1988. Multiple leaks, some of which have not been reported. To this end, the company spent a total of 1.4 million US dollars to pay fines and reach a settlement.

The production of the Mountain Pass mining area has dropped sharply since 1998, and its output has dropped to 5,000 tons in 2000. However, unlike the market's widely held view that mine closures are due to competition from Chinese companies, Mark Smith, chief executive of molybdenum mines, argued that environmental issues were the cause of mine shutdowns.

The tailing pond is an important environmental protection facility for mines and is responsible for accommodating the discharge of tailings or other industrial wastes. According to Smith’s explanation, due to the fact that the existing tailings pond has no more capacity, the new tailings reservoir that can be obtained in 2002 is planned. The permit was not permitted until the mining plan and environmental impact assessment report of 30 years of 2004 was passed. However, the position of the new reservoir was not established during the approval. Therefore, the mine was eventually shut down in 2002, and rare earth mining in the United States also began. stop.

During this period, the Chinese company’s market share in the global rare earth market has increased significantly. From 1995 onwards, rare earth production has increased from around 55% of global production to 96% in 2008. According to the “Key Materials Strategy” report issued by the U.S. Department of Energy at the end of last year, the supply of rare earth oxides in China was 125,000 tons in 2009, 2470 tons in Russia, 50 tons in India, and 0 in the United States.

However, despite its monopoly status, China did not benefit from this position from the 1990s until 2005. According to the information on the website of the Inner Mongolia Autonomous Rare Earth Industry Association, China’s exports of rare earths increased by nearly 10 times from 1990 to 2005, but the price was suppressed to 64% of the original price. In the world of high-tech electronics, lasers, communications, superconductors and other geometric requirements, China's rare earth prices have not risen but have been deteriorating.

As the Chinese government began implementing mandatory planning for rare earth production in 2007 and began to reduce rare earth exports, the situation has turned for the better. In addition to the decline in the price of rare earths in the international market during the financial crisis, the price of rare earths has basically kept rising.

According to the statistics of the Ministry of Commerce of the People's Republic of China, the average customs price of China's rare earth exports in 2007 was US$14,052 per ton, which was a year-on-year increase of 95.4%. According to the molybdenum company prospectus introduction, after experiencing the decline in 2009, from October 2009 to June 2010, the rare earth price rose an average of about 70%, of which the price of commonly used rare earth oxides such as antimony oxide, antimony oxide rose more than 80 %.

But it's too late. A foreign rare earth industry personage told Caixin reporter that the soaring prices caused by China's limited production will certainly be good news for rare earth companies in the short term, but in the long run it may have a negative impact on the rare earth industry. "Rare-earth prices doubled may inhibit the large-scale application of rare earths, high prices will encourage countries to develop rare earth alternative resources and technologies to reduce costs, a reasonable price, stable supply of rare earth industry is the best." He said.

Capital profit

Unlike structural materials, the use of rare earths as a functional material has become increasingly important in the last 20 years with the shift in economic development patterns. With the rapid development of the green industry, rare earths are required for hybrid power, battery vehicles, and fans, and they are also widely used in electronic products and defense industries, such as guidance, satellites, detection, communications, lasers, night vision, etc. Fiber optics and other military-leading sophisticated high-precision technology.

According to the statistics of Australia's IMCOA consulting company, in addition to the decline in rare earth demand caused by the financial crisis in 2008-2009, the global rare earth demand continues to increase from 2005 to 2015 and is expected to reach 200,000 tons in 2015.

Although the Chinese government had not yet severely restricted production in 2007, the rare earth companies on both sides of the ocean had started major actions at the same time. As Australia's heavyweight rare earth company, Lynas began planning to set up a rare earth separation plant in Malaysia, and molybdenum has resumed extraction of plutonium since 1998.

"I have been in the rare earth industry for many years. In 2007, China's rare earth exports have not changed much, but interestingly, Liner and molybdenum have become active in 2007, and it seems to me that there may be more. It is driven by the capital market,” said Lifton.

Liner, the principal adviser of Liner, explained that Liner had actually started to plan to increase production since 2001, but turned to Malaysia in 2007 because its plans to build factories in China were later frustrated by the restrictions imposed by the Chinese government's rare earth export quota. The reason why the increase in production is considered is because China is basically monopolized in the rare earth market, so the international market will definitely need replacement.

"It should be said that the production increase plan is not only related to the prediction of market prospects, but also related to the role of the capital market. Only with capital promotion will the story become a bright spot," he said.

Lehner's separation and smelter project in Malaysia is mainly financed through convertible bonds. However, many funds were withdrawn during the subsequent financial crisis and the project was shelved. However, it was later raised again through additional issuance of 1 billion shares. Now the project has been restarted. It is expected that it will enter the market in 2012.

The traces of the molybdenum mining company's role in restarting capital are even more pronounced. After CNOOC’s bid for Unocal in 2005, Unocal brought the molybdenum company to the international energy giant Chevron. However, according to Lifton, Chevron mainly focused on the oil business and was not interested in the abandoned mine at the Mountain Pass Mine. "It feels like being intimate with a hundred-year-old woman," he said.

In 2007, a company jointly formed by Goldman Sachs and several private equity funds acquired molybdenum companies after 13 months of negotiations. According to Lifton, the CEO of Molybdenum Mining revealed to him in 2009 that the company plans to go public in 2012. However, due to the enthusiasm of the capital market for rare earth in 2010, the company listed on the NYSE last summer.

“The enthusiasm of the capital market should have been with Linner since 2007. Investors in the US market saw Liner’s attraction to Chinese companies and Morgan Stanley and chose a molybdenum company with the same concept as the former. The existing rare earth supply has no shortage other than heavy rare earths, including thorium and antimony. The buoyancy in the capital market is more due to speculation about the future, said Lifton.

"Advance to rare earths"

It can be confirmed that, due to the increase in demand and soaring prices, the current increase in production of rare earth enterprises and more new companies entering the rare earth industry will become a trend. According to the aforementioned foreign rare earth sources, in the past, the rare earth industry was characterized by small market capacity and low prices. In the 1980s and 1990s and even the first five years of this century, the world had only an average annual trade volume of 1 billion US dollars, even if the company’s market share was further increased. It is not high, and the process of separating rare earths is very long. The large investment in the early period leads to high risks. Therefore, few people are willing to join the industry. However, the overall market is expanding and the interest of investors has increased.

Kohler (Edward Cowle) This is called thorium president of a mining company's energy, according to the company website, which is located in Diamond Creek, Idaho mines rare earth content of 4.7%, including heavy rare earth content of more than 1%. Later, the U.S. Geological Survey listed the rare earth reserves of the company's mines in Idaho and Montana, and the company decided to change its name to American Rare Earth Company two and a half years ago and became a hot spot for media attention. He said that the company has obtained a large investment from a well-known investment institution and will announce the details in the near future.

“Investors’ money and interests all have, but they are concerned that what they invest in is actually false. There are about 150 rare earth companies in the world, most of them are small listed companies, according to what I learned from people in the industry. Yes, really less than 10 rare earth companies," he said. According to his explanation, the so-called real rare earth company should be capable of actual large-scale mining in addition to owning a mine.

At the same time, he admits that it will take many years for the company to actually enter the market, and that it will not be comparable to molybdenum companies at that time.

As the major rare earth producer in the United States, since the molybdenum mine company resumed operations in 2007, it has not begun large-scale exploitation of the Mountain Pass Mine, mainly producing rare earth oxides from stockpiled rare earths, and focusing on how to increase rare earth recovery. .

The current industry average recovery rate is about 50%-60%, and the company plans to increase the recovery rate to 90%. “We plan to complete this work in 2011 so that our ore usage will be reduced to half of the usage in the 1980s, which will increase mine life to 140 years,” said Smith, CEO of Molybdenum Mines.

In terms of expanding mine production, the mine is expected to produce a total of 19,090 tons of rare earth oxides in 2012. The second-phase expansion plan has also been approved by the board of directors and is intended to raise funds by issuing mandatory convertible preferred shares and common stocks. JP Morgan Chase Morgan Stanley will serve as its joint underwriter. According to the plan, the company's second-phase expansion will be completed at the end of 2013 and the output will reach 40,000 tons.

The aforementioned rare earth industry sources stated that the industry’s view is that in 2015, 180,000-200,000 tons of rare earth production in the world, China will account for 100,000 tons, molybdenum ore and Lehner may each produce 40,000 tons, and the rest Small company offers. Although the person in charge of public relations at the Molybdenum Company stated that he questioned Lehner’s 40,000-ton production, China’s status as the world’s largest supplier will not waver in the short term.

Despite the rich reserves of rare earths in the United States, former US Geological Survey's Heidrick said that unlike China, it will take a long time for U.S. mines to obtain approval and begin actual mining. Now, some new companies entering the market are still in the exploration phase. Airborne remote sensing and drilling detections have not been subsidized by the U.S. government. At present, except for molybdenum mining companies, others need at least 5 years to 7 years for mining.

Several foreign rare earth industry sources have stated that China and Japan are the world's leading suppliers and suppliers of rare earth raw materials. Japan is not currently experiencing a shortage of rare earths. It is only worried that due to the continuous growth of China’s own demand, it will further reduce its supply to Japan in the future. Therefore, it will be so tight in 2010 when China significantly reduces its export quotas.

Therefore, Japan has set its sights on the United States. In October last year, Sumitomo Corporation and Molybdenum Corporation signed a memorandum of financial support of US$130 million. With the support of Japan National Petroleum Corporation, Sumitomo provides support to molybdenum companies in the form of ordinary shares and corporate bonds. Develop a production supply chain from mine to magnetic. In return, Sumitomo will receive stable supply of rare earths for the next seven years. In December, Hitachi Metals also reached an agreement with the Molybdenum Company to establish a joint venture company to build rare earth alloys and magnets in the United States.

According to Kohler of US rare earth company, there may be several cases of Japanese investment in US rare earths on the spring and summer of this year. However, the United States is more sensitive to investing in rare earths in China.

An American rare earth miner, who did not want to announce his name, said that there are indeed several Chinese companies that have contact with them to negotiate investment intentions. “But even Chinese companies are not willing to go through a long process of approval because they know that the U.S. government will say no to them. It is a waste of time to worry about this approval.”

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