ABOUT LYNAS CORP
Lynas Corp Ltd will become the only Rare Earth producer outside of China from July 2009 (Quoted by Patersons Securities Limited)
Lynas owns the richest deposit of Rare Earths, known as Lanthanides, in the world at Mount Weld, near Laverton in Western Australia. This deposit underpins Lunas' strategy to create a reliable, fully integrated resource of Rare Earths supply from the mine through to customers in the global Rare Earths industry
The mining contractor has commenced mining with first ore placed on the stockpiles in December 2007. Lynas is in the detailed design phase of an advanced materials plant to be established by Lynas Malaysia Sdn Bhd in the Gebeng Industrial Estate, Kuantan, Pahang, Malaysia. The company plans to become the benchmark for security of supply and a world leader in quality and environmental responsibility to an international customer base.
'Rare Earths' is the term given to fifteen metallic elements known as the lanthanide series, plus yttrium. They play a key role in green environmental products, from energy efficient compact fluorescent light bulbs (CFLs) to hybrid cars, automotive catalytic converters and wind turbine generators. They are also essential in the development and manufacturing of many modern technological products, from hard disc drives to flat panel displays, iPods and magnetic resonance imaging (MRI) scans.
Mt Weld Rare Earths Oxide (REO) deposit known as the 'Central Lanthanide Deposit' (CLD) is without a doubt the world's richest Rare Earths ore body, easily capable of supplying up to 20% of the global market for 30 years.
In addition to the world class Rare Earths Oxide (REO) deposit, the Mt Weld carbonatite is also host to extensive polymetallic Resource within the 'Crown Deposit' including niobium, tantalum, zirconium, titanium, and Rare Earths.
Dr Phillip Hellman of Hellman & Schofield Pty Ltd, Sydney, completed a JORC-compliant multi-metal geostatistical resource estimation study which resulted in Indicated and Inferred Resources totally 37.7 million tonnes. The ore composition is presented in the table below. The majority of the ore lies between 30m and 60m in depth, suitable for open pit mining.
The scoping study completed in 2005 envisages an open-cut mine and a process route based on existing technology to produce a suite of metal compounds and products. The strong economic and technical results of the scoping study were encouraging.
Ore samples for mineralogical assessment and metallurgical testing were prepared this year. An external research institute has been engaged to work on the mineralogical assessment and preliminary process development of the polymetallic ore, thereby allowing this project to move forward whilst Lynas personnel remain dedicated to the development of the Rare Earths project.
The next step for the Crown Polymetallic deposit is commencement of process test work based on the mineralogy and preliminary process development.
The Mt Weld Resource is potentially the world's second largest Nb2O5 resource (ranked by contained niobium metal) compared to the resources of existing commercial operations which include:
* CBMM's Araxa deposit in Brazil, with 460 million tonnes grading 2.5% Nb2O5 supplies over 80% of the world niobium market,
* Mineracao Catalao de Goias Ltd's (Anglo American plc) deposit in Brazil totaling approximately 18 million tonnes at an average of 1.34% Nb2O5, and
* Niobec Inc's Canadian underground deposit of 24 million tonnes at 0.65% Nb2O5
Titanium metal and Ti-ferroalloy products are used in the aerospace industry, for specialized process equipment in power engineering, chemical processing and in sporting equipment, notably gold clubs.
Rare Earths and Scandium
The Mt Weld Rare Metals deposits also contain significant grades of Rare Earths strongly enriched with the valuable heavy lanthanides, which could ultimately contribute considerable value. Also present is scandium which is used in high strength aluminum alloys.
BCC Research reports that the value of Mt Weld Rare Earths is expected to increase by 40-80% by 2008.
(BCC Research is a leading information resource producing high-quality market research reports, newsletters, and conferences. )
First three contracts have a combined value in excess of US$310 million
First Rare Earths ore mined at Mount Weld with 98,000 tonnes now on graded
stockpiles, mine development on schedule and budget.
Decision to increase final separation capacity at Malaysian Advanced Material
Plant by 5,000 tonnes REO, all light Rare Earths will be separated to a final product in
Decision to locate Concentration Plant at Mount Weld, which will reduce transport
volumes by 75% and de-risk the transport component of the supply chain.
Additional Malaysian Government incentives received in consideration for the request
to relocate the plant from Terengganu to Pahang.
Submission of Environmental Impact Assessment to State of Pahang Department of
Signed sale & purchase agreement for the new site in Malaysia and payment of the
first down payment of 20%.
Increase of export tariffs to between 15% and 25% by Chinese Government for
Chinese Rare Earths, thereby increasing the Mount Weld average basket price to
US$12.85 as at 14 January 2008.
Engineering and construction of the Concentration Plant in Western Australia remains on time and within budget as at 30 June 2010.
ENGINEERING AND CONSTRUCTION
The focus for the second quarter was the mobilisation to site and the subsequent ramp-up of construction activities. Engineering activities were essentially finalised during the quarter, with some minor completion of works continuing into the first part of the third quarter. Construction of the Concentration Plant has progressed well, after an initial ramp-up, with manning levels at about 60% of the peak that will be encountered during the third and fourth quarters. Substantial concrete works have been completed, with mechanical and structural work underway. Some early delays with the concrete works, and later with the curing of painted steelwork due to cool weather in Perth occurred, however this lost time has since been recovered.
For the Tails Storage Facility (TSF) and Evaporation Ponds (EP), clearing and topsoil stripping was completed by the earthmoving contractor during the quarter. During the third quarter earthworks construction will commence on the TSF and EP.
Visits to site by regulatory authorities had positive outcomes, with no problems encountered to date. With required approvals in place, dialogue with the regulators remains ongoing to ensure no unexpected issues arise from their viewpoint during commissioning or operations of the completed plant.
With plant construction progress on schedule, and permanent site administration facilities now in place, preparations are underway for the first of the operational staff to transfer to Mount Weld and commence the Fly In/Fly Out (FIFO) work-cycle. The first of these staff are scheduled to begin working at Mount Weld during the third quarter.
Advanced Materials Plant
Engineering and construction of the Lynas Advanced Materials Plant (LAMP) in Malaysia remains on time and within budget as at 30 June 2010; with the first feed to kiln at the LAMP on target for the third quarter of 2011.
Site activities at the Lynas Advanced Materials Plant (LAMP) in the past quarter ramped-up in preparation for construction works reaching full capacity during the third quarter. The key activities of the second quarter revolved around the mobilisation to site of the main contractors for the construction of the plant, with the focus on engineering and procurement activities being to provide these construction resources with the information that they require to complete their tasks.
ENGINEERING AND PROCUREMENT
Engineering progressed during the quarter and the LampsOn alliance team between UGL and Lynas reported engineering remained on schedule for the LAMP as at the end of the second quarter. With the major concrete drawing production well underway, attention is now transferring to the issue of steel design to shop detailers directly from the three dimensional engineering model prior to fabrication.
During the second quarter Lynas investigated bringing in an experienced operator for the construction and operation of the Water Treatment Plant in Malaysia. Lynas has identified and selected Ranhill Water Technology to fulfil this role.
The major construction focus over the quarter has been the mobilisation of civil and concrete contractors to site and the commencement of civil works, including in-ground services and permanent site drainage, and the commencement of concreting activities, including the commissioning of wet and dry batch concrete plants.
In parallel with the mobilisation of contractors to site, the mobilisation of the construction management team has also progressed, with the relocation of key construction management personnel commencing and over 30 United Group Limited (UGL) personnel now mobilised to site.
Personnel for the Flue Gas Treatment Plant construction have been mobilised, with site establishment works having commenced. Personnel have also been mobilised for the commencement of construction of the pre-engineered buildings.
The cutting of piles is approximately 30% complete, with blinding slabs poured in the first process buildings in preparation for the first structural slabs to be poured in early July.
There are a subset of projects within the Lynas Ready For Start-Up programme (please note: Lynas has identified 144 projects as part of this programme) which are being carried out under the framework of the Technical Services Agreement with Rhodia. Rhodia are adding significant value and risk mitigation to operations of the Lynas Advanced Materials Plant (LAMP) through these projects, which include:
- Review of the operating manuals and standard operating procedures.
- Consultation in the Advanced Materials Plant commissioning plans.
- Training for 18 operations staff, with process training in Kuantan, as well as both classroom and field training at Rhodia's Rare Earths plants.
- Planning of pre-loading of solvent extraction batteries, which shall enable a short commissioning and ramp-up schedule.
- Review the adequacy of laboratory equipment and sampling requirements.
- Review of the safety hazards.
- Establishment of a committee to identify and address critical areas during construction, commissioning, plant operations and plant reliability.
- Review of the appropriate manning levels for the Malaysian operations.
As part of the production process, the LAMP in Malaysia will produce some gypsum-based Synthetic Mineral Products. These products may be used in various product applications within Malaysia. Significant progress has been made in the commercialisation of these Synthetic Mineral Products, an important element of the company's goal to contribute towards sustainable development. Potential customers have been engaged and Lynas has worked with the University Malaysia in Pahang to produce samples for potential customers, and we will continue to work closely with customers to ensure the product specifications meet their requirements.
As part of our corporate social responsibility and in line with our company values, Lynas has sponsored the Ivory Tower Program in Malaysia, which assists local students from underprivileged backgrounds with gaining placement at local universities. The program is under the patronage of the Pahang Crown Prince and managed by the National University of Malaysia. 114 students have been selected from secondary schools, namely SMK Beserah, SMK Baging and SMK Pelabuhan, to participate in the program.
What Are Rare Earths?
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Global warming due to green house gas emissions is a concern for us all. Rare Earths already play a vital role in the reduction of green house gas emissions.
The digital era is gathering pace; broadband access, digital television, digital cameras, and digital music are around us at home and on the move - Rare Earths are enablers of this technology and its miniaturisation.
Increased population and economic growth leads to greater demand of the world's energy, which means increased use of our limited fossil fuel reserves. Rare Earths are already playing a vital role in conservation of these reserves, and are likely to play an even larger role in taking us forward to the hydrogen economy.
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Article Researching REM's (Rare Earth Metals)... Exceptionally good work here -
"In conjunction with the cost review a detailed review of the project schedule also took place. The Board is pleased to report that the previously announced planned start-up date of the 4th Quarter 2009 remains in place."
"NEW CUSTOMER COMMITMENT
• New customer commitment signed for Mount Weld Rare Earths project.
• A Letter of Intent includes production from Phase I of the Advanced Materials Plant in Malaysia as well as additional volume from the planned Phase II plant expansion.
• There are now five customer commitments with a combined value of US$490 million using current prices for the first five years of operations."
TALK TO AN EXPERT: Clint Cox Makes The Case For Rare Earths
The Anchor House, Inc.
Clint Cox founded The Anchor House, Inc. in 1995 to focus on special investing situations. The firm has been focused on researching the rare earth sector for over four years.
What are Rare Earth Elements?
Over the last several decades, rare earth elements (REE) have gone from being an obscure scientifc novelty to becoming an essential ingredient in a signifcant portion of today's high-tech hardware. According to Dudley Kingsnorth of IMCOA, the current rare earth market is worth about $1.25 to $1.5 billion. In Japan it is said that, "Oil is the blood of industry, steel is the bread of industry and rare earths are the vitamins of industry."
REEs are used in iPods, cell phones, hybrid automobiles, wind turbines, energy-saving light bulbs, MRIs, laptop computers, fiber optics, SONAR, RADAR, flat-screen TVs, glass polishing, petroleum cracking, and much more. The list of applications is constantly expanding, and for many uses there is no current substitute for the REEs. Some of the highest growth areas for REE are magnets, high-tech alloys, and phosphors.
The rare earth elements are the lanthanide series from the periodic table and include:
Light Rare Earth Elements (LREE):
• Lanthanum (La)
• Cerium (Ce)
• Praseodymium (Pr)
• Neodymium (Nd)
Medium Rare Earth Elements (MREE):
• Samarium (Sm)
• Europium (Eu)
• Gadolinium (Gd)
Heavy Rare Earth Elements (HREE)
• Terbium (Tb)
• Dysprosium (Dy)
• Holmium (Ho)
• Erbium (Er)
• Thulium (Tm)
• Ytterbium (Yb)
• Lutetium (Lu)
Yttrium (Y) is usually included with the HREEs.
Promethium (Pr) is a rare earth but is seldom included because it is created in nuclear reactions and does not occur in nature.
Note that elements such as Gallium (Ga), Germanium (Ge), Indium (In), Niobium (Nb), Tantalum (Ta), Lithium (Li), Zirconium (Zr), and Hafnium (Hf), Tungsten (W), and Rhenium (Re) may fit into the broad category of "rare metals", but are not rare earth elements.
The REE sector's requirement for praseodymium, neodymium, terbium, and dysprosium is currently driving the market.
It is critical to be aware of China's approach to rare earths, as it is the undisputed epicenter of the rare earth market. The focus of REEs shifted from the United States to China in the mid-1990s. Since then, China has dominated rare earth production and is now providing about 95% of the world's REE.
The Chinese are currently making real efforts to consolidate the rare earth industry into three distinct districts within China:
• Bayan Obo/Baotou
• South China
Each of these districts will most likely be under the direction of one company, with the goal of making the industry more effcient economically and more controlled environmentally. If successful, the new consolidation could dramatically affect China's ability to control the flow of rare earths and who gets priority access to them.
Although most of the talk surrounding the light rare earths elements (LREE) in China revolves around Bayan Obo and Baotou, the Jiangxi Copper Group has stated that they will be spending hundreds of millions of dollars to develop deposits in Sichuan, and it is yet unclear what impact this will have on the market.
The mining of ion adsorption clays in Southern China is also being consolidated. There are many, many small mines that have operated over the years very inefficiently - often causing damage to the environment and to the water supply. These operations can be greatly improved, and the Chinese are making substantial efforts to do this.
During this consolidation process there may be unexpected supply shortages because of shut- downs or increased availability of product due to new effciencies.
China Export Quotas
Chinese leadership is very cognizant of the importance of the REE industry in today's culture of innovation, and they currently use a number of strategies to maintain control over the market. China continues to apply export quotas and raise export tariffs on rare earths, pressuring foreign companies to move manufacturing facilities to China so that they will have access to a guaranteed supply of the REEs they need. This also promotes substantial job growth within China at a time when they desperately need to create employment for hundreds of millions of workers.
There was a considerable amount of distraction, excitement and controversy surrounding Chinese rare earth quotas in the second half of 2009. At issue was a draft proposal mentioning the possibility of restricting export of certain rare earths. This created a media sensation, with the rare earths being thrust into the spotlight and becoming front-page news. However, the Chinese soon stated that they would not be restricting exports as suggested in the policy draft.
Most likely, China will not restrict export of any REEs. In fact, the first block of quotas for 2010 has been issued for Chinese companies and they are slightly higher than they were last year. This comes as a bit of a surprise to the market, and it seems the fear of China cutting of the West may have been overblown for now. However, we are still waiting for the joint venture (foreign entities with a Chinese partner) quotas to be released.
Any substantial change in the quotas may impact the market far beyond its usual reach as the media is more focused on the story now, and may blow it out of proportion, as happened in 2009.
The Rare Earth World Outside of China
Chinese dominance has led to a dramatic increase in rare earth exploration outside of China. The number of junior exploration companies involved in rare earth exploration has exploded over the past year to almost 200. Most of these companies have little idea of the complexity of the rare earth market - or what it takes to get a rare earth mine to production - but there are a small number of companies that are proceeding with the thought and care necessary to provide the possibility of success.
In addition to the junior exploration companies, it is important to note that rare earth endusers are also becoming directly involved - going upstream in countries such as Vietnam and Kazakhstan with the hope of finding new rare earth supply chains to decrease their reliance on China.
For all of these projects, the diffculty will be competing with China on price, and providing the elements in proportion to what the markets need. Any company that accomplishes this will fnd itself in a very unique situation with vast upside potential.
There is a history of dramatic shifts in demand for particular elements within the rare earths. When color television was invented, europium (Eu) became the keystone of a new industry. When samarium-cobalt magnets were frst introduced, samarium became a superstar. Since then, neodymium-iron-boron magnets have catapulted neodymium (Nd) into the spotlight. Dysprosium (Dy) is the current darling of the sector, as it is used in hybrids to allow for operation at higher temperatures.
There are thousands of scientists around the world working diligently to develop new innovations that utilize the rare earths. At any time, there can be an announcement of such an invention that can change the entire focus of the industry.
The triennial REE conference in China entitled "The 6th International Conference on Rare Earth Development and Application" will be a gathering of scientists from all over the world (but mostly China) to hear about some of the latest developments regarding rare earth applications.
In addition to new applications, the expansion of current applications may also affect the market. One example is wind turbines. As wind power increases, the demand for Nd and praseodymium (Pr) for the larger turbines may increase dramatically.
Risk & the Rare Earths
Pulling rare earths out of the ground is a tricky business. First, a substantive concentration of REEs has to be located - this alone is challenging, as there are no surefre ways to prospect for rare earths. Many of the newer companies claiming to have rare earths are recycling old deposits or latching on to known occurrences with barely more than a grab sample. In addition, companies are also assaying for REEs as they target other commodities.
Keep in mind that there are very few geologists that actually study the rare earths - and fewer still that properly understand the economics involved.
Even if a company has shown that they have rare earths in the ground, they now they have to identify and characterize the host minerals and determine if they are amenable to economic processing. Metallurgical studies must be done, as each project is unique.
This is an exceedingly tricky business, but one that is also extremely compelling and has excellent growth potential over the coming years.
Rare Earths - IN FOCUS
Underpriced Rare Earth Metals From China Have Created A Supply Crisis
December 6, 2009
China has a policy of predatory pricing, which has allowed it to gain monopoly control over some strategic natural resources such as the rare earth metals. The policy has now backfired as the low revenues to Chinese producers have deprived them of the investment funds they need to not only expand production but also to maintain the production they have.
The result is a massive Chinese environmental problem, which threatens all by itself to cut non Chinese end users off from their only supply.
I wonder if our western institutional investors really understand the key driver for China's rush to "develop" its natural resources. Western investors see greed/profit as the main driver for any production of natural resources anywhere. I think that the Chinese government,which we must remember is the owner of, and licensor of any production of, all natural resources in China, is determined to catch up with western technological progress by whatever means necessary not to make profits but rather to level the cultural playing field. Chinese "entrepreneurs" are not risking their lives and endangering the lives of their fellow countrymen primarily to produce natural resources for export; they are driven by greed, surely enough, but their greed is satisfied by the managers of Chinese state enterprizes who cannot get sufficient raw materials to meet their quotas under the current five-year plan. These managers will pay more than the "contract" price for supplies, because in China failure to meet your goal is the same as failure to do your job, and simply to say that you could not get sufficient supply is merely making excuses, because the same five-year plan that you are not fulfilling says that the natural resource producers will produce enough material to fulfill their part of the plan, and their suppliers of equipment will also produce enough. Those failing to meet their quotas are clearly failing the people... I think we all understand how this type of pressure can lead to environmentally unsound decisions and even to official mines looking away from unscheduled and unsafe production.
The idea that we in the west can compete with this type of thinking by simply looking at such metrics as "return on investment" is at best naive.
I have said before and I will continue to say that the so-called prices set for rare earth metals by Chinese producers at all levels are arbitrary.
When the crunch point comes, and it may come very soon, when there are no rare earth metals to be had in China for export the prices of the rare earth metals will skyrocket and institutional investors will squander billions to re-start the western supply and value chains for the rare earth metals. Western institutional investors simply don't know how to value rare metal resources; they are about to have an expensive lesson.
Let me repeat: I believe that the rare earth metals are underpriced already at the present time, because they represent a Chinese pricing set for the main purpose of keeping the production of the rare earth metals and of their end use products in China to maximize the jobs created by this industry within the domestic Chinese economy.
This situation cannot last much longer, because China itself is running short of rare earth metals due to inefficient production methods, environmental problems, and corruption.