NorCal, I am sharing Jim Sims email I received earlier in response to your concerns expressed in reply to your post dated Saturday, 02/05/22 12:50:37 AM:
"If NioCorp elects to proceed with the production of rare earth elements (REEs) as a byproduct of our planned Niobium, Scandium, and Titanium products at the Elk Creek Project, there are several factors that are likely to provide important insulation to market disruptions such as the world experienced when China aggressively increased its REE exports following the WTO ruling in 2015 against China’s then-system of REE export tariffs and quotas.
First of all, commodity price volatility is particularly difficult for producers that rely primarily on the production of one commodity, or set of commodities in the case of REEs, for the bulk of its revenue. This was certainly the case for the Mountain Pass facility, which only produced REE products. In sharp contrast, NioCorp’s production of REEs would be as part of a larger product suite of Niobium, Scandium, Titanium. Such diversity of production provides a high degree of flexibility when any one product suite experiences price volatility. Moreover, any REEs that we produce would be byproducts of our primary target products, and the cost of mining REEs and getting them into solution (in preparation for separation into individual REE oxides) would be considered sunk costs.
Also important in this regard is the fact that there are many more manufacturers today that are actively seeking non-Chinese sources of REE materials. In years past, consumers of REEs made purchase decisions largely based on price. Today’s markets are very different. Governments around the world – particularly in the European Union – are developing REE sourcing policies that will require manufacturers to use greater amounts of non-Chinese REEs. European automotive manufacturers in particular are now more sensitive to the geographic sourcing of the REEs they need. We know this because we are in direct discussions now with companies in that industry in both North America and Europe.
A third factor is the very large increases in forecast demand for REEs, particularly the magnetics, because of their growing use in environmentally preferred technologies such as electrified transportation, high-efficiency motors and pumps, home appliances, power tools, robotics, and many other industries. It is clear to all industry players that the world is going to need more REEs than China alone can produce and export – a lot more. That is why manufacturers of products that require REEs are aggressively seeking new sources of supply, particularly in Western countries.
Finally, China’s high-level REE industrial strategies have evolved over the past decade or so. China is less focused on exporting its separated REE oxides and is much more focused on exporting OEM products that utilize those REE materials. This industrial policy is very logical: by maintaining all stages of the REE value chain in China – REE mining, REE oxide separation, REE metal production, REE magnetic alloy production, REE magnet production, and all of the follow-on steps between the manufacture of REE magnets and the manufacture of OEM products that use those magnets, such as EVs – China is able to leverage its REE industry to provide a much larger number of jobs across this value chain for its citizens. This is also why it is not surprising to see China actively seeking to acquire REE mineral properties around the world today.
In my view, for these and other reasons NioCorp is in an excellent competitive position to do very well if we make the final decision to add magnetic REE oxides to our product portfolio.
I hope this information is helpful.
Jim Sims
VP, External Affairs
NioCorp Developments Ltd.
Jim.Sims@NioCorp.com
+1 (303) 503-6203"
