Rare Earths Reality: Hype vs Hope with 3 Experts

Everybody screams are heavy. Rehearse in USA and terrible. Well, last year China exported to the US 60kg of dysprosium, 10kg of turbulent. It's not really a very irrelevant market. Energy. It's tacky. I don't know if you've been following what's going on. In the rare earth market, maybe you've been paying attention. Rare earths have become the hottest topic in global news, right China. US embargoes? Export crunch downs.

It's called mainstream, like the the conversation around rare earths, which is kind of crazy because we're in the world of like mining news and I don't feel like I know enough about this yet somehow the mainstream has like an opinion on rare earth, on rare earth projects, like share prices of weird projects are going crazy. It's a, it's a, it's a truly bizarre time. Weird projects to say the least.

Yeah. So I just really wanted to kind of get to the bottom of what's going on, what it means, what's relevant to markets by summoning three of the best thinkers I know that are obsessed and addicted to the rare earth industry. A truly All Star crowd like rare earth observer, DK sustainable dude, this is, you know, All Star type material to actually just teach us and help us and the money miners learn about what is going on, right?

Absolute All Star crowd I'm. I'm pretty excited to share this conversation. This panel of absolute rare Earth Experts JD is brought to you by the Mining Experts MMS Mineral Mining Services. Mate, the team that specializes in maximizing operational efficiencies across WA mine sites. MMS, the go to name when it comes to turnkey contract mining services all the way technical services to your open pit mining here's. What you need to know? No money minus.

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Go MMS. Utterly delighted to be joined by three of the preeminent experts in the rare earth industry. This expert panel is led by none other than the rare Earth observer, Thomas Crummer. Everyone would be very familiar with your blog, which is prolific for anyone who wants to get up the curve in rare earth. An up and coming person who's been writing very thoughtfully is Sustainable Dude, which is the frog you see on camera right now. Hilarious.

Well done. I'm loving that Sustainable Dude. And to round out the panel, we've got Dylan Kelly or DK of Terror Capital, who has come on before and has that investor lens in the buy side, kind of equities in the names and has shared with us generously in the past his rules for investing in the very complex rare earths space. Because by the way, a lot of the time, gentlemen, thank you so much for making the time to talk about rare earths. What a topical commodity to be

talking about right now. I've never seen rare earths so hot, although I'm sure they have been in the past. It's not entirely rare, after all, for it to be topical. No, it's true. I think I also made a tweet about this before. Interesting red flag. Consider it a red flag, and now it's market foresight, so times can change. Absolutely.

What is going on? I'm struggling to make sense of what's real, what's not, what's policy, what's conjecture, what is moving markets like if we were just to kind of step back and assume that I know nothing about what's happening geopolitically right now, which is true. What the hell is going on? I want to go straight to the gut on all things in the subject matter. Thomas. What's, what's the story mate? What's is the geopolitical problem? Reality. Or is it really just a fuss

about nothing? Well, when, when China started messing around with with gallium and germanium, I, I'm used that if, if they would blanket Bandra's exports this that they would shoot themselves with an elephant rifle into both feet.

So, and actually they didn't several years ago, I think somebody in the Chinese Foreign ministry said that China does not want to aid the production of weapons that can threaten China. And what they did I think over many years was to work out which are the most relevant materials. And I think this seven element ban or say dual use

classification may have come. Anyway, it is not really related to the trade war, and that is why the Americans have also so much trouble to make the Chinese take a step back from that, because from the Chinese side it may not be really related. It would have come anyway. My view for all of the seven elements, for each of them, there is at least one Pentagon contractor who is a major user of this product, of the relevant product. That is probably why these seven

were chosen. The seven also referred to the six strategic weaknesses that the Chinese military has published. I think it's less trade war related. Also now the result from the talks in London shows that the Chinese side has absolutely no intention to reverse this in any way. I'm quite interested like dual use makes total sense to me.

What I've found really interesting is that like the six records we've seen so scanning I'm leaving aside right now because it's like be covered in very different process than the other ones. Generally, what happened interesting is it also coincides with very, I would say vulnerable feedstock supply chain. I'm wondering what your thoughts are and does it play a role in this what we've seen today? I think Dylan can sing a song

about this. This in general a problem of everyone who wants to enter rare earth that rare as production, rare separation, rare as metal making and so on that the cost are and the CapEx are probably three times as high as sale in China. By extension, it would like last year in Tokyo, we had the Rare Earth Industry Association conference and I was hosting a panel of junior minor rare earth hopefuls and I just tossed the question also what level must

rare earth prices be so that you become feasible And it was Unizomo, the same prices must go up three times. That is a real problem. It's also related to the know how say if you look at recovery rates of of junior as miners and in the West they are below anything that would be licensable even in China, they really squeeze the lemon dry, whereas we recover anywhere between 40 and 80%, you know, so that that already is a cost factor the the know how.

Interesting. Would you say like putting such a system in place like we've seen with this expert licensing system is also maybe to say Myanmar really gets messy. Like it's already messy, but there's still material flowing, albeit very varying per month. Once it's if the dries up, is this something to to like? Are you trying to like hatching them themselves here? Is that a possible scenario?

You see that that one very common misunderstanding is that rare earth products should be commodities. It is. China has made great strides to commoditize them to make sure that products are interchangeable and therefore there is more competition among manufacturers. And of course, you can trade them on exchange. In the West, we have no industrial standards for rarest products.

I understand the international standards organization ISO has been on internationalizing Chinese industrial rarest standards for 10 years. And I'm not sure if that is the preference of the ISO, but they've come up with sustainability standards, recycling standards, packaging standards, you know, all the fringe stuff, but nothing of

substance. I asked one member of the group at ISO who is at it, and he claimed that the United States, part of the ISO is not so really interesting having standards for rare earth products. So these are not commodities. Every user has his own purchase specification, you know, and they're, they're all test processes and so on. Nothing is standardized. So you can't in the West, these are specialty chemicals. And also you have to must really look at what are we actually buying in China.

About 60 to 70% of the imports of the US, of Japan, of the EU are the rare earth elements, Lansano and cereal. What do we use them for? Well, we use them for the production of fossil fuels and the consumption day off. Yeah. So we are talking about fluid cracking catalysts for producing gasoline, diesel, whatever you want, you know, and we're talking about the catalytic converter in internal combustion engine and hybrid cars that is our main dependency in rare earths products, no.

One talks about that. Magnet dependency, that is written on a different piece of paper. In terms of rare earths, yeah, everybody screams, ah, heavy earths in USA and terrible. Well, last year China exported to the US 60kg of dysprosium, 10kg of terbium metal. Yeah, as metal, not as oxide. 10 tons of Lanzano metal, 12 kilos of scandium and the 236 kilos of of metal alloys. These are the metrics. If you go into the compounds, that's a slightly different picture.

Yeah. But you know, it's not really a very relevant market. No, that's, that's definitely a very good point. I think we just said the main concern with the USA government would be more in the high performance magnets now that we see humanoids percent potentially being deployed if these these kind of things. Yeah. See the the primary dependence of the West is on the products that are made from the earth, including rare earth permanent magnets. We have no value chain behind it.

That's why it's so funny. You know, if there's someone who says we are going to produce 4000 tons of NDPR per year, you know, in Europe, right? So who do you sell it to? There's no, but you need a metal maker who makes metal out of this, and then you need the magnet maker who takes the metal. But there's another little detail that everyone always forgets. You know, you leave the two elements, neodenium and prosodenium in the proportion that you found them in your

deposit. You don't separate them. But these proportions are different from deposit to deposit. Like Linus says, 78 to 22. I don't know right now off hand what is MP materials. You know the standard prescribe 75 to 2585 to 1570 to 30. You will not go lower than 70 to 30 because then prozodinium will kind of affect the coercivity of the magnet.

These are not commodities. You get chemical compositions prescribed by your customer and that says you have a 78 to 22 product and the customer wants 75 to 25. What do you do? Nobody is separating ND and PR. So where should the balance come from to make a metal that is according to the specification of the customer? Yeah, really. People don't go into the details. So that that kind of throws into doubt the entire ability to have supply chain independence, you

know what I mean? The specifications matter. It's almost implausible to build out an entirely independent supply chain that can make unique customer demands independent of China. Well, it sounds to me like to that point, policymakers are pushing far too hard thinking that they can build a supply chain out without realizing the full complexity of how many steps there are between pit top

and finished product. The second part being how much noise is thrown at the wrong end of that argument and continually sort of pushed ahead without really thinking through the complexity, the cost and the economics of this. It's farcical to think that we're ever going to chase, you know, supply chains that are this discombobulated with some sort of economic return of any stretch, even if we were to increase prices, you know, 3 to 4 fold.

So in my mind, I think there's so many mainstream narratives that have spun on the space that just don't hold up to reality. I think, Thomas, you're making some good points just cutting them off. But what do you make, Thomas? Is the world going mad over something that's largely relevant? There are several points to observe. First of all, I think it is important to understand that the high performance and the Feb magnets, so these are the ones that still perform at high

working temperature say 180°. You know, they are arguably maybe on behalf of the market. You have to visualize that China last year exported 58,147 tons of Rarer's permanent magnets to 130 countries. These are often commodity magnets that can stand a working temperature of maybe 80°C. But which of our rarest hopefuls wants to go for these magnets?

Nobody. All of them claim for themselves that they can manage the high tech composition of permanent magnets that are reaching a working temperature of 180°C or even 230°C. So they're trying the impossible rather than to go from the simple and 1st because you know since 2009 there has been no NDFEB production in the United States. You know in Germany vacuum have the minority joint venture with Jungka Sankwan in Beijing where they get the blanks and ship them off to their subsidiaries

for the final processing. We should have actually gone from the simple stuff that we may be able to do. Then, of course, after 2014, when China lost the WTO case of the EU, Japan and the US, all efforts in the US rested. Everything just fell apart in the EU, they continued. But it was more to prove activity rather than to come up with something tangible. So it was very important to support projects that are sustainable and environmentally benign. It was not on getting something

done. We approached from the two different ends and had nothing in the middle say it doesn't help us if we mine a rare earth also concentrates if we do not have the industry that uses this and separates the rare earth produces the more than 50 different compounds of rare earths that China exports to us. And then a further downstream industry which takes part of this, makes metals to supply

those users who require metals. Yeah, I, I think that's very unique about the supply chain as we see nowadays, especially when we're trying to build in the West is we're trying to build this from upstream to downstream. Normally you would do the other way around from downstream to upstream. And like Thomas mentioned, these, these aren't really commodities in the general

sense. So there's, there is so much variety between the, the mineral concentration treats the carbonate, if it's oxide, the many, many things. And now we're seeing a host of junior mining projects which are trying to mark their products. They're finding middle Western buyers. It's all going into China because China has many companies which can take these these very

various products. So I think one of the most important things to do, it is like Thomas said, build your magnet capacity in the West, then go search for feedstock subsequently. I would say like 5-6 years ago, we should have simply started doing NDFEB magnets and we would have sourced the metals in China and we would have dared them not to supply them. And at that time, China had absolutely no appetite for confrontation. So we may have actually succeeded.

Of course, what is always getting buried a little bit is the role that our Japanese friends played in this whole mess. First of all, Japan is regularly 40 to 50% of China's total rarest compounds and metal exports of the export value, not of the volume. The volume is smaller, and they were sitting on the core

patterns for the NDFEB magnets. And Hitachi Metals had the arrogance to believe that they can influence the supply and demand of NDFEB magnets if they control the licensing of the process, that they don't give a license to anyone who wants one. But look at the whole market picture and see, oh, would this

throw the market off balance? You know, and that is why the Chinese suit Hitachi Metals, they said that they're abusing their market power because Hitachi Metals, if somebody was using Hitachi's process and starting to produce NDF EB in China, Hitachi would sue them. But had this manufacturer asked for a license, he wouldn't have gotten it from Hitachi Metals. Had Hitachi Metals not had this policy, we would have probably a much larger distribution of NDFEB magnets, left, right,

center. And do you see any joint initiatives between the Japanese and the US in Europe? Now you have this project that involves Solvay less common metals and cherister and they based on the assumption that they can get the Namibia Nabibia Critical Metals project lifestyle going which is best see no time with a very favourable proportional composition. But you know, this project is moving at snail's speed and I do not think it will get going before 2030, maybe not even

beyond. Yeah, feed soot is definitely a problem with which you see in many projects in the West. I do think we see a changing Western perspective on how we source especially heavy red concentrates. We saw the recent MU it's still an MOMOU, but Linus entering an agreement with the Malaysian state of I've got the state name

but for ionic clay concentrate. I think it might be a watershed points where Western companies may follow suit here in Malaysia and Western companies are opening themselves up for yeah what is effectively in situ ionic clay leching, which is environmentally questionable. I would say I think Thomas and didn't have some more perspective on this, but I do know that that Malaysia is really looking to expand their

industry. I think they want to target like 3000 tons of trio by 20 thirty 10,000 tons of NDPR which is I think there might be western companies that looking to tap into that I. Think that's an interesting, interesting point. Who would have thought that the Malaysians that actually want to increase the amount of railroad production is coming out of the country?

Does it? Your license still expires in a couple of years, Doesn't. It no, don't continue to roll it just long as the WLP doesn't come anywhere near the near them. But I think, yeah, there's well, one, one point I wouldn't mind touching on is this notion that we all think about clays as being posted in the parts of southern China branching off into Myanmar.

But as we know, clays somewhat abundant and there seems to be a whole series of discoveries after discoveries scattered all over the place in high rainfall areas. Minister Ice and the caldera with Mei and VMM come to mind, but also what Sarah Berto's got. We're talking about some of the clays that are occurring up and down the Malaysian peninsula. I mean, in my mind, it seems like we're discovering them

relatively frequently. But the ability to actually bring these things into production is still another question. Thomas, I wanted to get your thoughts on that. In my mind, I was working the thesis that if Clay's work at Sera Verde gets up and works and makes money, we probably don't need to build another Hard Rock, rare earth, vertically integrated mind. But it sounds like there's some troubles there. There's still some questions over.

It first of all, I would like to challenge the notion that we don't have enough feedstock. China imported last year as direct feedstock to the rarest industry, 177,000 tons. What is the lack of feedstock here? Then on top of that, if you add to that the heavy mineral sands, which by and large in average may contain about 1% monazite, some 2, some nothing, China imported 6.8 million tons of that with the clear objective to extract monozide from that. See a totally different problem here.

That is that rare earth love radioactivity. So inevitably for practically most of the feedstocks, which sometimes includes ionic clay, there will be radioactive waste. In the US there is only one private company that is licensed to dispose of such radioactive waste, that is Energy Fuels. In Europe, because of not in my backyard, there are only temporary reception facilities for nuclear waste. It is almost impossible to to get some permanent facility

going. I understand they are commissioning now something for nuclear fuel rods in Finland, but for this type of waste mostly thorium. But then if you, you have uranium, you have actinium, you have radium, you know, nobody wants to have it. I mean, Solvay, they still have thousands of tons lying around in the Lavrochet factory since 1992.

You know, the total quantity got distributed this about 6000 tons plus the rest of the quantity somewhat distributed in temporary shelters across France. You know, So the real point here is the, the particularly the EU, but also the Americans, they actually can't handle it because they don't know where to put this waste.

And frankly, they don't want to incur it because what the, the, the products say like electric vehicles shall appeal to to environmentalists also, you know, so how is that if, if at the front door, you know, there are fights over permanent disposal facility for the radioactive waste that incurs when you want to produce the magnets for this electric vehicle, you know, then suddenly it doesn't feel so green anymore. And that is actually behind EU

policy. They are looking for strategic partners, you know, as far as possible away. So all this mess from mining and the radioactive waste subject is totally out of mind and out of sight. You know, they selected a project in Malawi as a strategic project for rare earth. At the very front door at the EU affiliate in Norway, there is a gigantic deposit that is really high in trio and that is very, very prospective. It beats anything else anywhere near the EU.

But it has not become a strategic project because it comes with ample portion of radioactive waste. Yeah, that is the fact. On on top of that, they are also victims of the foghorns of junior rare earth miners who try to make people believe that You Delight can be a rare earth resource. You know, the research into separating rare earths out of You Delight has been going on in Russia since 1930. So far we don't have anything.

And now one of the miners in Sweden with the You Delight deposit, he now says, oh, we're looking for financing to 1st dig the UD light out and then leave it there and wait until the process is far. How to express from that? The Russians have waited for 95 years, you know, so maybe made another 95. And it's the same in Greenland.

The pain was tested in the Euro rate program and I got very interested, so I looked up all the documentation and everything, but it was not clear if they ever managed to extract anywhere else from that. So I wrote to the company who did the separation, you know, 2 times. They didn't reply because they knew that I knew that they had

failed. You know, this is of course a side, say Warzine, but the real issue here is the environmental problems that the politicians in the US and also in the EU do not want to have these discussions about permanent disposal facilities of radioactive waste and things like that. Isn't the permanent disposal facility? Isn't that a sticking point for Linus in Malaysia? Like aren't they? Aren't they supposed to be building APDF in country there? Yes they do, at great expense.

They also built a facility to produce rare as carbonate and Australia and extract the sodium content there. The composition of what is mined at Mount Wade has changed a little bit. Based on the previous composition, Linus output of sodium per year was approximately 150 tons in a huge stack of phosphogypsin.

I I think the company had a point when saying this is really almost irrelevant, but Malaysia has been through the bucket mirror disaster of Asia rare earth, a Mitsubishi company where the contractor who had been hired to dispose of the sodium waste properly had duty fully discharged it wherever he deemed fit by the roadside. Basically, you know, and that created higher cancer rates, miscarriages, deformations at birth and things like that. The whole line.

So in Malaysia, the rare earth mining that is now being supported from the ionic clays is called non radioactive rare earth mining. So back to liners. They had to build a facility, but it's, I mean, what is the facility? They dig a big hole and then they line it out with two liners of polyethylene plastic and then they pile the phosphogistin on it. Versus what we're doing and what Kalgoorlie throwing it on the back of a truck and just putting it back in pit, no need carefree

what the contrast. It is. It is seriously a problem and I think it would be much better if this was discussed openly and a solution would be offered rather than everybody keeps it under the carpet. Every junior miner who sends samples for analysis, for every drill hole, he gets the full composition of everything that is inside. And if you read the drug reports, you also see that sodium and uranium was tested, but they never published the results.

You have to dig that out, you know, and calculate back and then you come to a value that is the probably likely content of radioactive material, you know, like this pansana thing in Angola. The whole area was peddled by the Angolan government for uranium and thorium, you know, and then early, early Pansana in the previous incarnation as Rift Valley where careless enough to publish the results of thorium

and uranium as well. You know, maybe they will have 10 times the output of liners and no one looks at the consequences. I think one point I'd add to there, it's almost when it comes to the radioactive elements around the clays. I managed to go out and visit Ansto not so long ago, and I know I'm going to butcher some of the quotes there, but one of the elements that I came away from was the existence of low grade in a concentrate or low grade in situ is almost a side issue.

It's what happens when you treat it in any sort of way. You get this activation of isotopes of those elements into some far nastier things that perhaps, well, I couldn't actually name some of the elements that were getting thrown off, but they sounded particularly bad. And perhaps I just simplified that whole sector as being simple. OK, there's, it's all the bad stuff has been washed away in situ.

It's all clean and green. But it turns out, hang on, you add a little bit of, add a little bit of heat, add some chemicals in one way. Yeah, it can dramatically accelerate the concentration of those nasties and make it a a transport handling issue and ultimately a disposal issue. Yep. And and I I see hopeful and Brazil had the experience of that. I look at it very primitively. Generally, sorium will drop out during flotation, but the uranium content is water

soluble. You know, this goes, this can go all the way to the final product, which also an American rare earth hopeful has experienced. And this is really something that needs to be dragged out into the open. I do not believe that we will get to any rare earth solution if we do not address these issues. See, the Chinese monazite is a typical usual suspect monazite. The classic monazite has about 5 to 6% of thorium and about 0.5 to 0.6% of uranium inside, plus

other nasties. But that is basically it, you know, so monazite is actually a fantastic or to use for, you know, for a rare separation. It's not bad. China banned the mining in 2012 because they had absolutely no control over where this waste is going. And it was going into rivers and lakes, you know, and landfills and so on. You know, 2014 they closed all known IIC deposits in South China also for environmental

reasons. This, this, this leaching with, with ammonium sulfate is, is a disaster for the water resources, be it groundwater or surface water. And if you, I mean, I'm sorry to say, but in, in, in Malaysia, I've, I've seen two environmental risk assessments fired on ministry websites and the assessments were very open about it and they disappeared from the website.

Strangely. You know, this, there's this, you know, on the Internet, things evaporate, you know, you can't control it. So this is something that they completely ignore in Malaysia, this. And that is not good because what, you know, what is the alternative to in situ leaching? In situ leaching, you can leave the trees where they are. If you go for strip mining and tank leaching, you know, what do you do to the rainforest? Yeah. Absolutely. In tank leaching might be even more.

Environmentally, actually, I think iron absorption claims place on aberration. It's not on top of that, you know, since we are not good at it. We've seen that with junior miners with the trial leaching, they managed to leach the physically bonded ions, but the chemically bonded ones not. So our recovery rates are anywhere between 40 and 60% on an already low trio resource. Yeah, this is all not very good. So I think it's an aberration.

I really think we should go for the traditional ORS that are provenly working. I'll happily take the other side of that trade just a bit, the arbiter of companies doing things better than what they've been done in the past. Is your view there DK that in situ will return and will be done responsibly or do you think it'll be done, you know, tank leaching? If it's going to be in Western hands through North American, Australian listed group, you're not going to get away with full stop.

It's just never going to get off the ground. Investors won't back it, we won't back it. These guys need to bend over backwards to ensure that whatever they're doing, the footprint and the externalities environmentally are rock solid. I mean, I think every side visit that we went to in Brazil always went through the process about looking at what nearby mining operations from bauxite had done

on the rehab front. And there seems to be a pretty simple case about the fact that it's so low strip, it's relatively like thick and therefore the footprint isn't actually that big. And then such a high rainfall area, the ability to regenerate was pretty high. But it was all about the chemistry set about what you're putting back into the ground. I mean, get rid of the ammonium sulfide, which of course, but what was being put back in.

And I think that's what I observed to be probably spending a lot more time in terms of the test work, trying to understand how can they put something back that's Inuit and the cost associated with that. There's always seem to be lots of different tanks and lots of different complex parts. The flow sheet, trying to get that right. Can it be done well? I'm not sure. I haven't seen it yet. But to do what was like a cottage industry function in certain parts of southern China.

Now Myanmar, they can't do it like they've done. It's not going to happen anywhere else. That's the Western oversight. So I kind of think we could do it, but at what cost? And could they ever raise capital? I doubt it. What's going on with Sierra Verde at the moment? I know that they needed more capital recently, some ramp up challenges, but we're more capital fixed their issues and they'll find a way to be profitable. Yeah, that's really hard. So sorry.

Go ahead, Thomas. No, please, Please go ahead. No, as I only have a few words to say about this. I mean they're private. We don't hear really much about them or they're not really putting any information out there. There are some voices in the industry that say like they have problem with their filter systems which are kind of ruining recoveries there. That's all I know. So from what I've heard, the

ramp up is not going as planned. Maybe Thomas can give more respect on this, but this certainly has like with influence on what what what we'll see happening in Meteoric and for it is. The mining doesn't only happen in Myanmar, it also happens in Laos at ever increasing rates and also in Malaysia. We are seeing more and more coming out of Malaysia. I know some couple, a couple of guys there. That's of course Chinese capital and Chinese labour involved in Malaysia.

Anyway, it is done the cheapest possible way. And if you pump ammonium sulfate solution into the ground, 10 millions of litres. You know, it's naive to assume that you could clean this up in any way. This simply doesn't have so tank leaching. But we know that these type of clays, they are found in areas of heat and a lot of rain. So that's basically tropical

rainforest. So if we say, OK, this deposit is very wide and it's only 40 meters deep, or let it be 50 meters early strip mined, you have to remove all the greenery and you will not restore a forest within a few years. It simply doesn't happen. There are also cases where strip mining is removing a layer of clay that used to be holding the water, you know, so that the soil remains humid and suddenly of desertification. Some satellite photos from

Myanmar suggests that happening. You know, so I really do not believe in iron absorption clays being a solution of the problem. So that raises an interesting question. Say we don't want to source heavy from ionic class, where do we source them I mean? Very small deposits. It's also sometimes part of monozide deposits.

Monozide itself tends to have a favorable composition. And don't forget we are engineering for example, for the magnet rare earths, whether in the West or in the east, particularly in China, we are engineering the heavy rare earths out because this is something that most union rare earths miners simply don't understand, the rare earths

inherent imbalance. Every deposit has a different proportional composition, but none of them has a composition that is exactly according to the market demand. So that means we, if we want to produce enough neodymium for the market demand, we over produce lansanum, cerium and samarium and we under produce dysprosium, terbium and probably hernium. So if we then say ah no, no, no, we changed that.

We make this prosium the target and we produce this prosium according to market demand, then we will over produce also neodymium and prosium, not everything else for that matter. And God save us if Thulium one day should take off. The whole balance will be screwed if you have to. There's a reason why Lancelon costs only $0.60. There's a reason why Cerium only costs $1.60. There's a reason why Terbium costs $1000. You throw the whole thing out of balance, whatever you do.

And this is something the Chinese have been wrestling with for decades. And people from the outside who look at it, they think, oh, they are manipulating the prices. They keep it cheap in order to keep us out of the market. Nothing could be further from the truth. It is supply and demand, and it's the living hell of the rare earth inherent imbalance that you see at work. That's all very good points. I totally agree with you there, which does raise an interesting question.

You talked about natural ratios. We've seen the carbon tides in monoxide sometimes very different. But since I only know of one pureplay, seen a time deposit which has like a small chance of making it bronze range. Think you know it very well. So what could be if we don't want to do in situ leaching? What could possibly fill this gap? Are there more pure casino time deposit? Do price need to rise in order for bronze range to be economical? Yeah. First of all, there are two

projects under development. One is another, minerals and the other one is Namibia critical metals. These are the famous ones under development.

The other thing is, and that is also where China is the trailblazer. They engineer dysprosium and turbium out of the magnet. For example. They have a technology and it's patent and it's grain boundary diffusion. The idea is OK, we need to alloy the NDFEB magnet so it becomes more heat resistant. But where does the heat impact the magnet? On the surface? Not inside. So inside you don't need that much dysprosium. You actually don't need any at all.

You need it at the outside. This grain boundary diffusion technology allows them to reduce the dysprosium content while maintaining the temperature resistance. You know so. So there are two ways to address this. One is of course produce a little bit more, but the other one is to engineer them out of the applications as far as possible.

To what degree do you think like the easy gains have been made on that front, like has been around for a couple years, like yes, we see man plateau here or will we see further reduction? Well, there's there's another trend that was discussed last year at the Rare Earth Industry Association conference. I do not know what has become of this, but it's simply cooling. You have a cooling system, you have batteries that get hot, and when they get hot they don't perform that well.

So there are automotive developers who work on an electric vehicle cooling system, in which case you don't need a working temperature for the magnet of say, 180°C, but you could maybe live with 150 or even lower. That's the application research. We must not forget that the Western automotive manufacturers likes things cheap. The neodymium magnet is the most energy efficient and powerful and lightweight magnet that we know.

And but you know, do we? Do we need passenger vehicles with 400 horsepowers that accelerate from zero to 100 kilometers an hour and 3 seconds in on our highways and in our congested cities. I mean, I had a car in Toronto, you know, jogging was faster, so to say. There are alternative motors, say magnet based ones, or you look at BMW, they who build a complete powertrain.

All this is possible. Of course, then defenders of NDFEB and of top performance will say, oh, but then the battery, then you don't get a range of 800 kilometers, you only get 600 kilometers. Who cares? Seriously, battery technology is moving on. We are going to see the solid-state battery with a range of 1100 kilometers given an NDF EB motor. If it then with ferrite motor only delivers 700 kilometers, who cares? Yeah, OK.

You've had a long time view on backing the incumbent. I'm curious to hear you're somewhat in enthusiasm from an equity perspective on the ION, except have your rules changed? So let's get back over the rules quickly. So back the incumbents, barriers to entry far too high capital cost, operating cost, economic returns or no go #2 never go full retard. Stay upstream. You go from a mine to a concentrate, maybe a carbonite.

And that way you're probably going to just do a Forrest Gump or arraignment like to go any further downstream into separated oxides through through corn, mixed carbonite, crack it, separate it. That's to go full retard. That's like I am Sam, simple Jack, simple Jack. So very, very sort of precise focus on the strategy, low shape and the test work. Final element. If we do start straying into large scale separation tech, you need the explicit backing of a state.

So what we've seen with Iluka coming in being backed by Australia was I by the US What Linus did had with the Japanese, that sort of equivalent sort of backing. So the strategies I thought were appealing around Clay's remained relatively positive. I think everything was hinging on this. Sarah Verde getting up. And the trouble that we just discussed briefly before indicates that, well, the problems are perhaps more than

we thought. And if it's a black box and no news is getting out, and I think Thomas has put out a couple of posts citing the fact that they've had some straggly export trade data come out that indicates that it's perhaps not working well. Maybe the test work wasn't done enough. Maybe it was forced at the wrong time and by a private equity group that perhaps wasn't necessarily focused on the problems on the ground with solving that need to happen on the flow sheet.

In my mind, I find it very hard to get constructive on other types of development plays in the equity space. I think Brazilian rare earths and what they're doing or perhaps what they've got with this high grade high radium, you know, high grade cool was a treo values of over 10 percent 4000 PPM uranium. That's something different. That's interesting. That's high in assigned material, but obviously there's the problems of the flow sheet.

So in my mind, Mei VMM, they still have a strategic appeal in terms of that potential sort of disruption concept. But I think Thomas is making some good points there around rehab treatment properly. And I think some of our recent technical discussions or deeper dives there have indicated that we've perhaps simplified the radionuclide issues to a point where we're overlooking 5 mega problems.

Like the chemistry set in these things is unbelievably complicated no matter which set you look at. Clays are something different. Only a couple of stages, basic bleaching, but every time I've looked at project, the closer you dig, the more convoluted and complex it becomes. So I think in my mind you're still backing the incumbents. And I say smaller, isolated exposure to those that can disrupt the market through conventional simple means finally going upstream, focusing on those names.

I found that point on Sierra Verde interesting. JD Like what? What? Maybe some work wasn't done properly to understand things when you were doing the work to put it all together. Maybe things were you know what, what is that a function of the amount of drilling that was done? Is that a function of the sample management? Because you know what sorts out both of those things? Poking a few holes in mate. Really drilling.

And if you are going to drill, mate, there's only one team to go with the mighty K Drill. K drill mate. Doesn't matter if there's a few exploration holes or a multi year program to prove it up, they'll look after you. And like you were saying, mate, not just a matter of punching in the meters, right? You want to get it done safely and you want to get it done productively. No downtime, no dramas, no hassle. A drill. You want productive drilling, You want sampling. Sample matters, mate.

It's got to be reliable, clean, accurate, no contamination. You've got to be able to trust the numbers. And last but not least, mate, the team has got decades of years of experience. They'll mobilize quickly and they'll just get the job done. Doesn't matter where in the state they are, they get the job done. Yeah, it doesn't matter the type of drilling, they find a way. It's just simple as that. Go K drill.

Look at the market caps of Linus and MP and what like the Linus is like a $9 billion Australian company now and doesn't make money. Like top line revenue in the entire like between MP and Linus is like 550 million last quarter. And look at the collective market cap of those two companies, it's enormous. So the equity valuations are biking in much, much, much higher prices. Is it realistic to think that way about the future? I suppose it's more of a

discussion for the team here. Look, in my mind, businesses like this, it's not a producing A commodity, it's producing specialty chemical product. They can do so at high margin to a very grateful customer base that's got some sort of certainty for an external supply chain. It's hard to do berries the most enormous. They probably should be trading at something like uranium,

chemical kind of multiple. I don't necessarily think about this in terms of like an NNDPR function, but you've got to value these guys somehow on a commodity price in the future. But this is a very complicated product. It's a wrap your head around in terms of the supply and demand function and what's going on in China. So all I'll say and I'll lead into what's the colleagues here in my mind. Yes, prices need to rise what threefold in order to get to incentive levels for Western

developers. But what's missing from that discussion is what cost of production is for an upstart in the developing world, and their cost of production and their cost of capital. In my mind, there's a lot of supply that can come on. As we know it's pretty abundant in the Earth's crust. If there's a simple processing mechanism that can be tapped, we've got to be thinking about this alongside an existing cost of production competition. Yeah, those are very interesting points.

You make that and I totally agree also to your point of investing upstream to the concentrated carbonate level, I totally agree there, especially when you're producing concentrate. We see so many miners who just feel at the PA studies for the concentrate. So did it decide to go to carbonate? But the funny fact is carbonate, it's a 0% margin value add there. It's not making any money. It's even just inflating your CapEx and your ability to get this mine online. I actually do take the

counterpoint there. I think there's a lot of supply that might come online in the next few years. In the short term, three to five years, I have quite some confidence in Energy Fuels. The main costs the structure in producing oxide is to concentrate itself. What Energy Fuels are doing very smartly is they're sourcing their monocyte byproducts from their heavy mineral sense.

So they can probably source it like have to concentrate cost of other producers, which gives them some flexibility for their extraction circuits and oxide production there to do it at low cost. Also on Brazilian records, I'm finding these guys pretty interesting. I do agree that the flow sheet, it's probably more complex than what we've seen to date. In many miners they find this new mineral face, it's called Chefkinites.

We haven't seen this on a commercial scale to date in the industry, but actually published today some pretty interesting metallurgy results in their AMREC. So they're producing a clean AMREC just with direct leaching of their ore, which is interesting. I do agree, like from a capital term perspective, almost none of these miners are going to make it. Like let's look back at the last 20 years, we've seen an MP resort, we've seen Mount Wealth come into production and 0

further. That's three mines in 20 years. How many juniors are there out there? Probably 100. So you're really looking for these juniors. If you're looking at hard work, you're looking at like a high startup PF high grades, probably 15% trio, somewhere, somewhere around that range if you want to have capital payback and then you can go lower. But let's realize that MP, it's like 6% trio, which is already loss making. So that's probably your lower

boundary there. I think, if I may say, why did

Linus work? Because of course they have a very, very patient financier who also had to rescue them in between. And the more important thing, they had a ready market, Japan. Japan is the only functioning rare earth market outside China. The rest of us are only extras basically. So Linus had the support from Japan, from the Japan non government entity that is very governmental and the Japanese market that is very, very

important. This is how they could grow MP materials and my opinion they could reopen the mind because the Chinese shareholder offered them the market to sell the concentrate. MP were making money until they started fiddling around with things trying to reduce a separation process and separate NDPR and probably also some guns on cerium. And that that I think is where the misery started because see, liners now want to increase product capacity and but already now where does the NDPR go?

Japan has a market of 5200 tons of neodymium and NDPR per year. So where does the rest go? China and then they conveniently stop separating at the promethium gap. So they have the so-called SEGH, which is some arium, erbium, gadolinium and holmium which the concentrate of which they sent to China. And they they can be so grateful that China is taking it. And, you know, then then this me too company called Brazilian Rare Earths. Yeah. They go and say, oh, produce a

carbonate that is marketable. Marketable to whom? Please, who will buy this? Yeah. And then we will also have an seg that will find a ready market where please, you know, assuming that China will forever be the trash can for junior rare earth minor concepts. You know, I would not be so sure where what we are looking at in the current politics may well be China getting selective on what

it buys from whom. Previously China was not interested in what rare earths was produced from imported rare earths raw materials. Since this year it is. So everything falls on the quota. And then they've clearly shown that they may become selective because the Malaysian government has been asking China for rare earth technology for years for licensing. So ahead of XI Jinping's recent visit, licenses were prepared for the in situ leaching and the carbonate production from IAC

deposits. A week before Xi Jinping went to Malaysia, these licenses were ready to be sent. But this is something that the miners of Malaysia already have. They have the Chinese workers there. They have the experts, They have the geologists, the geochemists. Everything is there. They didn't need this. But the Malaysian government, of course, didn't know. So they were really, really grateful about these licenses. Yeah, but China has absolutely no intention to go beyond that.

One thing I'd like to remark with regard to carbonate also there's a very clearly visible trend that instead of shipping a comparatively low price carbonate Myanmar laws and also recently Malaysia actually shipped mixtures oxides. So after calcination, basically the the difference is you do not the end user does not need to calcinate anymore and can probably go directly into the solvent extract. So this increases also the number of customers.

So anyway, but you know, I think we we have to slowly get used to a situation where China is not available anymore to take junior minor raw materials and that we are stuck with do it And then we also have to look at, you know, producing market etiquette quantities. It doesn't help you if you have a gigantic separation facility, if only for a fraction. You have a market domestically and need to export the rest against China. You know, So I think we need a

complete rethink. Isn't that kind of perplexing then? If we all kind of agree that the equity case for almost every opportunity is dismal, isn't perplexing how much brainpower we all put into this specialty commodity? Matt I mean, ever spend any time looking at some of the detailed financials about how much mining companies actually make? That's a very good point.

And I mean, what's also interesting is when we look at all these juniors, they're all bodies, they're MP studies, you, you name it. Like you say, it's dismissal, like almost none of these can ever make money. But I think something we have to accept is look at MP, look at Linus, they traded like 5 times their MPP. Like that's just marked reality. So it's very risky to invest in a junior based on the perception that after once you start producing, it's going to rewrite to such an level.

But it's something we have to keep in mind. But basically, if you're still a junior, you know it on an NFV basis, it's very risky. And none of these juniors are, except a couple in my mind are interesting to look at. We are. Also a little bit unfair. And our western civilized nations completely lack the value chain of rare earths. So for junior miners to show something that is interesting, they have to get into something that they are actually not experts in and can never be.

For a miner, he's turning out a concentrate. That's it. He's not supposed to produce in the Feb magnet. The networking capital will crush him. Forget it. It just doesn't work. Or have you ever heard of an iron ore miner who's producing precision steel tubes? Yeah. So this would be the equivalent. So it's maybe the expectation level is too high.

What I would recommend is having a really, really close look how the value chain is structured in China, which is everyone is a specialist in his particular part of the value chain. And these are companies that are independent, that they have their own profit loss and balance sheet to make sure that at every step of the chain there's at least break even. And at every step of the chain you have your own imbalances in

rare earth. So if you try to bring that under one roof, you will create one big mess. Keep it separate. One specialist, one specialist, 11 specialist do not force you junior miners to to produce something they have no clue about. It's not fair. Mine to magnet. The. Admission of the junior miner isn't even a miner yet. But that's that's super special retard. In that case, that's like, yeah, oxides is one thing, metal, then the magnets.

No, that's that's Brian dead. So this this is like a pregnancy, you know, at the beginning, in months 1 you, you produce some ore and probably nine months later, you know, you will finally produce some marketable product in form of a separated material. Not good. And I think that's unfair because it also drives the capital requirements through the roof and all that. The approach of U core is actually quite OK.

Unfortunately, they have a process there which probably doesn't work because, I mean, the masters of grand, the grand masters of rare earths and China have given up on a similar process already in 2011. But this is actually the correct approach. And some private companies, particularly in the US and Europe, who also say, no, no, no, we don't do any mining. We do the separation.

That's our job. And then LCM come in, metal maker, metal expert, nobody will challenge them because they are the guys who know how to do this. Yeah. And the same goes further downstream than, for example, for the magnet makers. Thomas, what are we, what are we to make of? I mean, you talked about like why was Lana successful? They had the market before the selling. We live in a time now where, you know, a project like any other is, is, is getting financed. There's no market for that

product. So now the government's coming in and that will be the market. They'll buy the product. Like what? What are we going to make of that? Like which? Project. I look as any other. Oh. Yeah. OK. Australia, my primitive view is you can already not profitably mine nickel in Australia. What makes you think that will be any better? So I really think that the capital expenditure amounts that are put out there for these projects in general are way too

high. I mean even heavy mineral sense, you know, the amounts are just flabbergasting this, this doesn't fly. I think that it's more of a general problem in Australia. Yeah. And $2 billion for the separation of Monazite is? If we're lucky. Brilliant dollars, of course, but this is It's too much. It cannot. It cannot be cannot work. What do you make of the current

status of geopolitical dynamics? With rare earth being this real point of leverage? Do we expect any change here? Do we think things will ease on any of the fronts in that respect, or do you think this is the new status quo? The capacities in China are gigantic.

You have basically 3 dominant rare earth compound manufacturers plus about several dozens of independents and the I, I don't want to be too specific, but I think the, the base capacity for separation in China is 510,000 tons and then you have a as permanent magnet capacity that is above 600,000 tons already. Last year the utilization rate in as permanent magnets in China was barely 60%.

I've done metal business for about 20 years and in my opinion, any utilization rate below 70% and you start writing losses. You know, with this in the background, I completely fail in understanding how China wants to hamper exports. As I mentioned, last year they exported 58,147 tons of rare earths, permanent magnets to 130 countries. This is an enormously dominant position and now they force practically the main players to have their own supply. Where does this leave China's

monopoly? Where does this leave the advances that they made? It will all come to nothing. We must hear the explosions and we must do something. So and I think in, in terms of of EU, the idea with Solvay and Carrister is nice, but we have to address the issue of processing primary raw materials in the EU with the resulting radioactive waste. This must come onto the table. This is the problem of the origin countries. You cannot do that. This is not OK.

If you want to benefit from the added value, you also have to deal with the problems. And don't forget all of them signed on to the Treaty of Nuclear Non Proliferation, the NPT. There are accession protocols where there are quantities inside which define how much radioactive material you can produce a year, and all of them will exceed them. So the IAEA would need to be involved if you want to leave it in the countries of origin. So I think there we should be more forthcoming and honest.

No, I totally agree there. And I think that's a very big advantage to China as China is a country lead by engineers, by smart people who see this as it is. We also tend to be very emotional in that sense. I guess radioactive is bad stuff. It is bad, but if you handle it in a proper way, it's effects can be mitigated very efficiently. And if you want to produce anything of volume in the in the West, we need to deal with this stuff.

We need to deal with thorium a place or relatively low on dorium, but any hard projects that's the best inside will be high in dorium. You can produce a relatively clean dorium concentrate. You can put it back back in the pit. There are multiple solutions there. We need to address this if you want to make have a chance as a Western supply chain. I think for me Axel's being a bit dismissive of the sector in terms of its ability to generate cash.

In my mind it's very simple for us to over simplify what's going on here. If we've learned anything from the last 30 years of BHP in Rio eliminating the downstream, it's always to focus on what we can do best, focus on the upstream. We're a country or in this part of the world or probably markets. We're a digging ship economy. We're still pushing product offshore.

So I think to do the advanced chemical engineering takes a different set of skills and a different set of knowledge to be able to navigate how to do this in an economic way. In my mind, I'm still still find it fascinating. I still think there's a lot of alpha to be found. But understanding the chemistry and the complexity of these flow sheets and the permitting, I think there's a lot more work

still to be done. But I'm still enjoying it, and particularly enjoying talking about it with these two gents. Is there any like market activity we can anticipate just like you guys have any theories about deals in the space that makes sense or likely? Can we go back to that? It was only very small news blip, but Linus and MP possibly

coming together. It's old news, but I always liked the notion that if we're going to compete with China in any way, shape or form you're doing, you're better off doing this together. Consolidating rest of world supply. I think strategically and from a marketing perspective makes a lot of sense. Not that I know anything in particular, but that's something that's rattling around in the back of my head and the ability to grow in with manufacturing, reassuring, reassuring going on.

I think that opens up several possibilities. So in my mind, that's something I'm keeping a close eye on. I'm also keeping an eye on what's happening with Ilooka in terms of third party feedstock. That's something that continues to burn in the back of my mind and what opportunities that may open up, whether it's for an NTU, there's some development company or development projects that look pretty good on face value that might be coming in into the space.

We still need to see how they're going to get a price that's

going to justify the investment. So coming back to that point around price bifurcation, which I think is a bit of a fantasy, maybe we do not need to start seeing what we what happened in the US, whereby correct me if I'm wrong here, Thomas, but there was some sort of domestic incentive price or floor price given to US producers of a domestically manufactured magnet was a $25 or $30.00 US relative to the Chinese price at the time, which was something around 20.

If you produce it in the US, there's a $5, there's a $5 head start. That type of mechanism I thought was really interesting and might lead the way in terms of getting us to figure this out on the downstream economic side of things, how this should work and also free open checkbook from the Australian government or the US also helps. Excellent guys. Thank you so much for sharing your insights. This has been just awesome. Truly grateful for the shared expertise of the three of you.

It's been an absolute delight. So thanks so much guys. Cheers. Yes, thank. You thanks. How good was that? I think we've got some partners to thank after that absolutely ripping conversation, JD. Hi, after that ripping conversation, we've got some ripping partners to thank. A big thank you to Mineral Mining Services. Grounded Sandy Ground Support Cage drill cross Boundary Energy Go. To Roke, go to Roke. Now remember, I'm an idiot. JD is an idiot.

If you thought any of this was anything other than entertainment, you're an idiot and you need to read out a disclaimer.