Excellent point!It seems to me that China is already flexing...

Excellent point!

It seems to me that China is already flexing it’s muscle and killing-off Pr and Nd projects.

A case in point happened just last week with Australia’s Vital Metals (VML) announcing that it had halted construction on it's half-finished rare earth processing facility in Saskatoon. Vital’s Interim chair Richard Crookes, stated in a release that, ‘there is “no economic imperative” to complete the project at the current time, citing higher costs, lower prices and no market for what the facility aimed to produce’. See full story.

VML's project was a great hope for global supply chain stability and it still maybe yet, the question we must ask ourselves is why can't it compete? In my view, any hard-rock hosted project aiming to produce predominately Praseodymium and Neodymium is a fundamentally flawed business model. There are only 4 rare earth elements that make any project viable because they represent over 90% of all rare earth supply value. All the others elements required have a small market and will most likely be in oversupply as more projects do come online. So far this year, these key main oxide prices are down approximately 19 - 30%:

Praseodymium (Pr) - $148.80 per kg
Neodymium (Nd) - $146.40 per kg
Dysprosium (Dy) - $527.80 per kg
Terbium (Tb) - $2,903.90 per kg

What separates AR3 from the hard rock projects is that it is clay-hosted, making it a low CAPEX operation without the radioactive waste disposal issues associated with them (Lynas is in the courts with the Malaysian Government over such concerns). Also, it means that AR3 has the potential to economically leach the higher value Dysprosium and Terbium to include their total rare earths range which is China's controlling cost advantage. Here's what I suspect China is doing:

Dysprosium and Terbium are almost entirely sourced from ionic clays in China and Myanmar. Therefore, they can control the full range of the key 4 materials (Pr Nd Dy Tb) which present over 90% of supply value ie, flood the market with Pr and Nd (which are usually found together in hard rock), be prepared to take a loss on them to de-incentivise the competition for them but make it up with the higher value Dy and Tb oxides of which they almost completely control. They can do this because they know what the various cost structures to produce each element are – the west are still learning!

China is out to protect its rare earths interests. So, they are entitled to make it as hard as possible for the higher CAPEX and longer lead time hard-rock projects to come to fruition. So, far it seems to be having an affect. As already investment is drying up with these projects. However, so dependent we are on these minerals for a green future, it may take governments intervention, as announced last week by the Japanese Government. See story.

AR3 is a 'rare' rare earths project. One of a few alternatives located in a sovereign-trusted country. Don't get me wrong. We will need as many exChina hard rock projects to come on line as the race for critical minerals to power the energy transition gathers pace, however, it seems to me that AR3 has the greatest potential of any current RE project to compete with China on the world stage.

Meanwhile, I’m happy to be parked here.

AIMO, DYOR GLTA(Patient)H