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Trump Moves to Expand Rare Earths Mining, Citing China Threat
By Jennifer Jacobs and Joe Deaux
September 30, 2020, 7:04 PM EDT
https://www.bloomberg.com/news/articles/2020-09-30/trump-moves-to-expand-rare-earths-mining-citing-china-threat
SOOOO my guy Tic tweets out, if Biden wins, 4K this yr for S&P, lmao, after zillion tweets this yr saying crash and 2200/1800 coming if Biden wins, he'll be right either way, lolol, annoying.....anyway, still love his daily calls, but hate that kind of nonsense and then throw in your face as a told ya so sort of thing he loves to do.....
To revive rare-earth industry..U.S. looks to the Mojave
By JAMIE SMYTHFINANCIAL TIMES
SEP. 25, 20202:40 PM
It is five years since the giant trucks hauling ore around the Mountain Pass mine in California’s Mojave desert fell silent.
Molycorp, the only major producer of rare-earth metals in the U.S., had just collapsed under the weight of a $1.7-billion debt. The bankruptcy burned investors and left the nation almost entirely reliant on China for the supply of 17 metallic elements that are embedded in most high-tech products, from wind turbines to electric vehicles and F-35 fighter jets.
Now, as relations between Washington and Beijing deteriorate further, the U.S. government is supporting the resurrection of Mountain Pass, which until the 1980s was the world’s biggest producer of rare earths. Disruption to supply chains during the COVID-19 pandemic has underscored the need for the U.S. and other nations to ensure they are not reliant on a single country or company for vital supplies of raw materials and goods.
The Pentagon has agreed to fund MP Materials — a private-equity-backed company, which bought the mine for $20.5 million in 2017 and restarted excavations — to design the first heavy rare-earth processing facility in the U.S. at the site. It is also backing a similar project in Texas proposed by Australian company Lynas, amid concerns that China could disrupt U.S. defense and other industries by withholding supplies of rare earths. In July, it handed $29 million to Urban Mining Co. in Texas, which manufactures rare-earth magnets by recycling electronic waste.
Beijing’s threat of sanctions on Lockheed Martin in July has added urgency to efforts to break China’s stranglehold on the industry. It controls four-fifths of the global mined supply of rare earths, and an even larger share of the manufacture of powerful rare-earth magnets — industries worth $13 billion a year combined. The Trump administration earmarked $209 million in public funds for the sector — thought to include the funding for MP Materials — this year.
“We’ve certainly learnt that a single point of failure in the global supply chain for anything critical is a significant challenge,” says James Litinsky, MP Materials’ chief executive, who adds that rare earths are essential to millions of future jobs in high-tech sectors.
“That is trillions of dollars of gross domestic product that, if we don’t build a supply chain in the Western Hemisphere, is going to be solely reliant on that single point of failure in China,” he adds.
Washington is not alone in being concerned over Beijing’s control of rare earths. The European Commission is working on a raw materials strategy that aims to wean domestic industries off their dependence on China by boosting industry collaboration and providing sustainable finance for new producers. Australia, which holds one-sixth of the world’s rare-earth deposits, has teamed up with the U.S. to source new deposits and support market entrants. And Russia has unveiled a $1.5-billion rare-earth plan to tempt investors with tax breaks and cheap loans.
Investors, previously chastened by Molycorp’s collapse, are again interested. MP Materials plans to list later this year on the New York Stock Exchange via Fortress Value Acquisition Corp, a special purpose acquisition vehicle, to raise $500 million to fund expansion. FVAC is sponsored by affiliates of Fortress Investment Group, owned by Japan’s SoftBank. Separately, a swath of smaller rare-earth miners and processors in the U.S., Australia and elsewhere are seeking to raise billions of dollars for projects to produce neodymium, praseodymium (NDPR) and other rare-earth oxides and metals.
Experts warn that the growing hype surrounding the sector masks the huge challenges new entrants face. China’s dominance of the supply chain stretches from mining to the manufacture of magnets and the assembly of electric vehicles.
“The investment risk on any one of these projects is monstrous,” says Jeffrey Wilson, director of the Perth-USAsia Centre at the University of Western Australia. “If you’re an investor wanting to put capital into that, then it’s got red flags all over it.”
The sector — a notoriously dirty, environmentally unfriendly business — is also plagued with technical complexity, a skills shortage in the West and a monopolistic market that hands pricing power to Chinese state-owned incumbents. When Beijing unexpectedly cut export quotas for rare earths in 2010, prices quadrupled — a surge that alerted Western nations to their reliance on China.
Establishing a viable non-Chinese supply chain, says Wilson, will take years and require major government support, international cooperation and collaboration from industrial giants in the U.S., Europe and Japan.
“The Chinese state-owned producers can do the Saudi [oil] trick,” he says, adding: “They turn on the taps, flood the market, the price of dysprosium crashes, the new entrant is washed out, and then they’ve reestablished their monopoly.”
Not that rare
Rare earths — the 15 lanthanide elements on the periodic table plus two other related elements, scandium and yttrium — have become an integral part of modern life. More than 90% of hybrid and electric vehicles use rare-earth-based magnets in their motors, while each F-35 fighter jet requires 420 pounds of rare-earth materials.
Despite their name, rare earths are relatively abundant. But they tend to be widely dispersed, making them difficult to mine profitably. The process of separating them into commercially viable products also poses technical and environmental challenges, which have caused many new entrants to struggle.
“Outside of China there’s very little expertise. We’re the only company in the past two decades, that have successfully ramped up, not just preliminary processing of rare earths, but right through to separated oxides,” says Amanda Lacaze, Lynas chief executive. “It is not something that you can easily do from a textbook. Our in-house IP [intellectual property] is one of the most valuable things we have.”
Lynas currently ships ore from its Mt. Weld mine in western Australia — said to be one of the richest rare-earth deposits in the world — to a $730-million plant in Malaysia for processing into neodymium and praseodymium, key ingredients in the most widely used rare-earth magnets. In July it won seed funding from the Pentagon to design a plant in Texas alongside its U.S. joint venture partner, Blue Line, to process dysprosium and terbium — heavy rare earths — that can, at the moment, be processed only in China.
“The U.S. has a strong and successful history of using the defense industry to create capable industries or supply chains,” says Lacaze, who is hopeful further government funding will become available to actually build, and not just design, a plant in Texas.
A growing number of experts — both inside and outside of the companies — suggest that public funding is the only way to build a supply chain outside of China. Lynas has struggled to compete with Chinese rivals, reporting a profit in just two of the last six years. In 2016 it required a bailout led by Japan Oil, Gas & Metals National Corp, a state-owned Japanese company, and it continues to burn through cash — raising $312 million from shareholders in August to bankroll a new facility to help meet environmental rules in Malaysia.
“There is no free market solution to this problem [of a non-Chinese supply chain] without significant initial government backing,” says Dylan Kelly, analyst at Ord Minnett, a Sydney-based brokerage. “Barriers to entry are extremely high, a project needs 10 years and over $1 billion to get up and running and there is no guarantee of success. Capital markets have been burnt in the past through misadventures.”
Beijing’s strategic vision
Beijing declared rare earths a “strategic” mineral as far back as 1990. A decade later during a visit to a mine in Baotou, Inner Mongolia, then-Chinese President Jiang Zemin declared that China’s task was to “improve the development and application of rare earths, and change the resource advantage into economic superiority.” When the trade war between Washington and Beijing intensified last year, President Xi Jinping visited a rare-earth magnet maker in Jiangxi province, almost as if to highlight his nation’s dominance in such a crucial element.
Chinese producers now hold about 80% of the global rare-earth market — up from 27% in 1990. Beijing initially used production and export quotas to build its rare-earth sector into a global leader, helping the nation establish itself as the “world’s factory” and win a greater share of global manufacturing. Under the Made in China 2025 strategy, Beijing is pushing to create an integrated supply chain in mining, magnets and high-tech manufacturing.
“They want to produce 50% of the world’s electric vehicles and 50% of the world’s hybrid vehicles by 2025,” says Dudley Kingsnorth, a professor at Curtin University in Perth. “If that is successful then that will decimate the automotive industry in Europe and North America and Asia.”
He warns that Beijing could further undermine the rest of the world’s ability to produce EVs and other high-tech products by limiting exports of rare earths and magnets. This is potentially a much bigger threat than any sanctions imposed on Lockheed or other defense companies, which probably have stockpiles that could last a few years, he adds.
“If the jobs disappear to your kids and grandkids then that impacts GDP,” says Kingsnorth, who is an adviser to NATO on rare earths, “and then there is less money to spend on defense.”
Ahead of its time
From MP Materials’ headquarters in Las Vegas, Litinsky is plotting the rebirth of the U.S. rare-earth industry from Mountain Pass. The founder of Chicago-based hedge fund JHL Capital teamed up with U.S. investment group QVT Capital and Shanghai-listed Shenghe Resources for the 2017 deal to buy the mine.
They restarted mining a year later but have to ship ore to China for processing, generating annual revenue for MP Materials of about $70 million. Using the money raised from its upcoming listing, MP Materials plans to restart the mothballed processing plant at the Californian mine by 2022 and later build the capability to produce metals and magnets.
“Molycorp had a great vision but the execution was lacking,” says Litinsky, adding that MP Materials’ mission to restore the rare-earth supply chain in the U.S. will boost jobs, national security and green technologies.
He says Molycorp was ahead of its time but did not benefit from the boom in electric vehicles, which he forecasts will consume the world’s current entire supply of neodymium and praseodymium within a decade. Technical problems that dogged the company’s processing plant at Mountain Pass have now been resolved, adds Litinsky.
But critics remain skeptical about MP Materials’ prospects, warning that another rare-earth failure could poison the investment climate in the sector for a decade.
James Kennedy, president of Three Consulting, says the geochemistry of the Mountain Pass deposit does not enable MP Materials to produce on a commercial scale the heavy rare earths, such as terbium and dysprosium, required for military-grade magnets in the F35 or drones. And politically, Shenghe Resources’ 9.9% stake in MP Materials is not consistent with the U.S. government’s stated goal of building a non-Chinese supply chain, he adds.
The Pentagon briefly paused its initial decision in April to fund MP Materials and Lynas after a call by a group of U.S. senators led by Ted Cruz (R-Texas) to support only U.S. rare-earth projects.
MP Materials says these concerns are groundless, noting that Richard Myers, a retired U.S. general and former chairman of the Joint Chiefs of Staff, has agreed to join the board and that once it becomes a NYSE-listed company, any foreign company, including from China, is free to invest in its shares.
But the project could yet fall foul of geopolitical tensions. “The political wind blowing against MP is the minority Chinese position,” says Wilson. “The question would be: Is the U.S. Defense Department about to fund a big technical study on how to separate U.S. rare earths, of which every single piece of information is going to go straight back to a Chinese competitor?”
Greater collaboration
If the U.S. is to establish a non-Chinese supply chain of rare earths and the magnets that power modern machinery it will require international collaboration, experts say. Rare-earth industry executives complain Western industry prioritizes low-cost products rather than ensuring its supply chain is not dominated by a single company or nation.
“Most companies require relatively small volumes of rare earths for their operations, compared to other raw materials. And even though rare earths are vital to their operations the procurement decisions tend to be taken by lower-ranking executives with an eye on costs, rather than by chief executives who might take a more strategic view,” says Anthony Marchese, chairman of Texas Mineral Resources Corp., which is seeking to develop a rare-earth and lithium mine in Texas.
“There needs to be a change in mind-set at the top end of the supply chain to ensure a U.S. supply chain is viable,” he adds.
Lynas has benefited from this type of support from Japanese customers, which have prioritized security of supply over cheap pricing since China slashed export quotas in 2010. But U.S. and European companies have been less willing to take a strategic approach to procurement, according to rare-earth experts.
“China is steadily tightening its grip on the entire rare-earths vertical supply chain,” says Kingsnorth. “Until the automotive industry, high-tech manufacturers and Western governments collaborate and use their purchasing power to underwrite investments in rare-earths processing and other downstream activities, they will continue to be outflanked by Chinese competitors.”
https://www.latimes.com/business/story/2020-09-25/rare-earths-california-mojave
216.7 lbs....
217.2 lbs....WEEEEEEE.....215 here I come!!!
@TicTocTick 1h Trade plan 9/17:
1. Long biased above 3367 , targets 3476
2. Short biased below 3367, targets 3280
3. Now 3382
MUST READ / VERY IMPT, I have not heard this anywhere else, has my attn, read these from top down.....
Jim Rickards
@JamesGRickards
·
9h
There is one story that may be bigger than the elections, the riots, and the pandemic, but it will take a few years to play out. The U.S. will convert China's $1.2 trillion of Treasury notes to a trust fund for COVID-19 victims and for economic damages. Bye-bye China reserves.
------------------------
Sean Leaver
@Sean_Leaver
· 9h
If this happens USD is going to tank big time as China moves into EUR, JPY, gold, & other reasonably liquid currencies such as AUD. Question is what will happen to commodity prices? If they rise in USD terms the Fed will get their inflation. twitter.com/JamesGRickards…
------------------------
Jim Rickards
@JamesGRickards
·
9h
Wrong. Reserves are not kept in "currencies" they're kept in bonds denominated in currencies or in gold. Most JGBs are already owned by BOJ. AUD market is tiny. Treasuries will rally on reduced floating supply. Your alternative markets are all too small. Gold will get a lift.
------------------------
Steve Henningsen
@Stevephenni
· 9h
Pretty sure China would consider that an act of war so..... twitter.com/jamesgrickards…
------------------------
Jim Rickards
@JamesGRickards
·
9h
The war started ten years ago.
-------------------------
Steve Henningsen
@Stevephenni
· 9h
Replying to @JamesGRickards
I agree with much of what you say Jim, but that would take it to a whole other level. It’s one thing to poke the tiger in the rear and quite another in the eye.
-------------------------
Jim Rickards
@JamesGRickards
·
9h
Releasing SARS-CoV-2 and covering it up is what I call taking it "to a whole other level." Converting China's bonds to a trust fund is simple justice for the original crime. If one has a problem, I suggest you call Chairman Xi.
-------------------------
https://twitter.com/JamesGRickards
wow wow wow, beasting....$$$$$.....
@TicTocTick 20m Trade plan 9/16:
1. Bullish tint as long as no daily close below 3367
2. Now 3403
3. Oh upside we may target 3476
4. If daily close achieved below 3367, we may target 3280
LOLOL ES 3410 met...another great call TIC!!!
FPVD beasting.....$$$......
Bring on copper....$$$.....
FPVD cranking...looking gooood.....
@TicTocTick: Hard times create strong men.
Strong men create good times.
Good times create weak men.
Weak men create hard times.
218.3 lbs.....3.3 lbs to goooooooooooooooooo.......
@TicTocTick 4h Trade plan 9/15:
1. All day 3403 caps rally now down about 1% on 0 MAE
2. Decent start to week, sell algo active all day today starting ~ 9 am
3. IMO some business to be done ? ~ 3410
4. This level may be explored tomorrow, if RTH open > 3367-3370
5. Now 3371
https://twitter.com/TicTocTick/status/1305582571581915136
"223.7lbs 8/24" NOW 219.1 lbs....4.1lbs to goal 215!!!
Started at 294.5 lbs, long haul, almost there....MIGHT change my goal to 210 lbs, no lower, we'll see....
See link back
@TicTocTick Sep 12 Weekly plan 9/14-9/18 (**FREE**)
1. Expect some more weakness
2. Orderflow pivot has now shifted to 3403
3. Rallies to orderflow pivot may be sold
4. Now 3323
This plan is free like all other plans
https://twitter.com/TicTocTick/status/1304811794293166081
From last night:@TicTocTick **Free** trade plan 9/9:
1. Only longs for me above 3342, target 3410
2. Only short below 3342 for me, targets 3296
3. Now 3332
Recently Tic has made a tweet about 4K and 5K S&P....yet today he retweeted his tweet from early 2020, saying 2200/1800 S&P by the election.....
SOOOOO no clue what to say, other than he'll be right either way.......
FVAC $15.47 / FVAC.WS $4.20 now....
@TicTocTick Weekly plan 9/8-9/11:
1. Primary thesis is balancing week between 3340-3460 zone
2. Rallies toward 3460 may be sold. Dips towards 3340 may be bot.
3. Break of either bracket will initiate next trend day (2-3% day)
4. Now 3414
Plz share free plan.
#ES_F $SPX $NDX $SPY $NQ_F
11:53 AM · Sep 5, 2020
https://twitter.com/TicTocTick/status/1302273671306735616
The warrants FVAC.WS pay off better than the stock FVAC......so I'm doing that instead to get the best returns possible.....
@TicTocTick 30m They wanna buy it but they need some federal government help
I mean u can still turn the algo on {the 6th one) and close above 3425
That’s all you need to do today to see 3550 next Friday
Now 3400
"FVAC.WS $3.20 area" NOW $3.93 ......
See the link back....
FVAC $15.69 / FVAC.WS $3.89 now
PLEASE READ: You know I post a ton of Tic tweets....he is all over the place, but I love him as a daytrader, makes me ton of dough with his mrkt direction calls daily.....
BUT
I have read S&P 2200/1800 coming very soon and lil while ago he spoke of 5K S&P possible by end 2020.....
SOOOOO
He has plenty of tweets to go to, to say I told you so, no matter what the stock mrkt does, way way up or way way down....I have no clue, don't care, just make money.....
FVAC.WS $3.25 now...added more this morning at $3.15 area....nice pullback opportunity to add.....
Yes, our mrkts to be closed Monday....enjoy your weekend Twister1......
ES hit 3350 area....made a several buys down here: SPAQ, FVAC.WS and TLRY on their deep pullbacks today....expecting stock mrkt to bounce this afternoon and Tuesday, maybe all of next week is dark green, since we saw an expected deep red pullback....?????
Who knows, not trading advice.....
Simply AMAZING, at alltime highs he said expect Nasdaq futures at 11,250 and we hit it already, less than a week....incredible Tic Toc is....
My main play now is FVAC.WS, $3's currently, just matter of time, before we see $10, $20 $30 and eventual $100 plus in next few years, jmo, we shall see????
This is not trading advice, it is just what I'm doing, you do your own DD and figure out what is best for you.....
ES 3450 area now, we could see another 40 to 70 points lower, before big bounce up to new alltime highs in next few weeks, no clue, don't care, I'm out of my UVXY, made my score, not gonna be greedy....did superb the past ten days and yesterday was awesome.....if we get back to alltime highs in a few weeks, I'll for sure be stalking UVXY again, before theeee big drop, especially if HidenBiden wins in November....although we should see down down down during October as people see all polls showing HidenBiden winning, whether he is ahead or behind, polls will all show like they did for Hillary....
NOT trading advice.....
SPY RSI from mid 80's to mid 50's in less than a day, lolololol....weeeeeee.....lets see the lower low sub 3400 and then see the ride to new alltime high and before the plunge plunge.....
3600 coming soon, likely we see a lower low shortly, sub 3400, before 3600.....
Tic....
Time will tell....
Sleeping GIANT about to wake up here......
That guy is da best, bar none, not a close 2nd....jmo.....
What a tweet yesterday at the alltime highs by Tic:
Tic Toc
@TicTocTick
Little birdie tells me a pullback can happen the month of September . On close below 3510.
To the tune of 3280-3340
Stay tuned
What a score off UVXY, man oh man, sooooooooo happy!!! $$$$$$$$$
UVXY - da gift that keeps on giving for me....love it....flip flip flip.....
S&P RSI in 80's is always a dead give away, time for pigs to be slaughtered....
NOT trading advice, ya must know what yer doin.....
@TicTocTick 32m Tic Toc went bear on $NQ_F at 12500 which was his target Direct hit given at 9941
Now his new target is 11250
500 down and 750 more to go
Can we get there next week and make toc toc great again?