On its surface, early analysis pronounced the deal as another step for Molycorp up the Rare Earths value chain, if not all the way from “mining to magnets,” as the catch-phrase goes, then at least from mining to refining the notoriously hard-to-separate REEs.

But at least one metals expert hangs his favorable assessment on the access the deal gives Molycorp to a Chinese market that currently consumes 70% of global Rare Earths production.

Analysts seem united in seeing the acquisition as net-positive for Molycorp. The cloudier question at the far end of the supply-chain is: will the deal benefit Rare Earths fabricators and end-users in the U.S. or in China?

Witness the first question on the March 9 conference call held by the heads of Molycorp and Neo Materials to discuss the deal:

From a regulatory standpoint, Neo Materials has export [quotas] that allow them to export rare earths out of China. Will the Chinese government… seamlessly honor those quotas? And then… you will be exporting rare earths from Mountain Pass into China, have you had any conversations with the U.S. Government and will they be taking a look at this…?

To be sure, it’s possible that REEs mined in California could be shipped to China for refining, and then shipped back to U.S. and non-Chinese users under the terms of Neo Materials’ current export quotas. It’s also possible, however, to envision a situation in which REEs mined in California and refined in China — a country that currently consumes 70% of total REE production — could be impacted by future policy developments that would make it difficult or even impossible to bring them back into the global market.

A weekend piece at WSJ Online captured the back-and-forth:

Ed Richardson, president of the U.S. Magnetic Materials Association, says the plan is worrisome. The U.S. is already ‘dangerously dependent on China’ for rare-earth-magnet materials, including to supply its weapons systems, Mr. Richardson said in an email. Molycorp’s ‘export of U.S. rare earth assets into China will only exacerbate this problem,’ he added.

Mr. Smith [CEO of Molycorp] played down the political and historical implications of the deal that now ties Molycorp, Magnequench and China. He said sending rare-earth oxides to China is a bid for “higher volume, higher margin” that will only reduce production costs in the U.S. and by implication boost supply of the metals for industrial users. “It does not in any way deplete our ability to serve the market outside of China whatsoever,” Mr. Smith said.

There’s a history here. As metals analyst Rick Mills recounts, Neo Materials is parent company of Magnequench, formerly a U.S. REE magnet materials maker. Bought in 1995 by a firm that proved to be controlled by Chinese state-backed companies with ties to the highest levels of the ruling Politburo (two of the Chinese firms were run by in-laws of Deng Xiaopeng), Magnequench’s new management shut down its Indiana operations and shipped the processing facilities to China.

Has Molycorp wrestled back into the U.S. control Rare Earths processing facilities lost more than a decade ago to China — or has China pulled into its orbit a chunk of newly-emerging U.S. Rare Earths production?

Welcome to the geo-politics of resource development. Geology and economics may tell us where the metals are and whether they can be profitably brought out of the ground — but politics and the clash of nations will have their say, especially when the resource is scarce and its value, not just to commercial development but to national security, is great.

The post Supply chain tug-of-war: Molycorp’s acquisition and what it means for the Rare Earth’s sector appeared first on American Resources Policy Network.

Rhenium is a specialty metal highly relevant to the aviation industry as part of high-temperature superalloys used in the manufacture of jet engines, as well as the chemical industry.  While not a Rare Earth Element (REE) itself, rhenium is extremely scarce in the earth’s crust and is almost exclusively recovered in very limited quantities as a byproduct of molybdenum and copper refinement.

With the U.S.’s foreign import dependency rate currently standing at 86% for its rhenium supply and China and Kazakhstan topping the list of our foreign supplier nations, the element has all the makings of a critical mineral from a U.S. point of view.  The Department of Defense (DoD) has taken note, the question is – will our policy makers?

Stay tuned for more for rhenium-related updates on blog, as well as on Twitter and Facebook throughout the month of February.

The post Happy Rhenium Month! appeared first on American Resources Policy Network.

What do I mean? Many metals analysts speak often of Molycorp’s mine-to-magnets vertical integration strategy; what I find interesting in the Molymet deal is the first hint of what might be a “horizontal” strategy, bringing into one company a basket of strategic metals, ranging from Molycorp’s Rare Earths to Molymet’s Rhenium and Molybdenum.

While Rare Earths, Rhenium and Molybdenum have not historically been a part of the U.S. National Defense Stockpile, all are on various DoD “study lists” of critical materials, and the establishment of a Rare Earths “inventory” is an element in Congressman Mike Coffman’s proposed bill. According to the new USGS Mineral Commodities Survey, the U.S. is 86% foreign-dependent for its Rhenium supply; Rhenium can be recovered during Molybdenum production. And as we know, even with the return of mining at Molycorp’s Mountain Pass Mine, the U.S. is still more than 99% dependent on China for its Rare Earths. (Interestingly, the Molymet investment brings Molycorp full circle, as it bought the Mountain Pass property in 1950 to mine for Molybdenum, light years before the mini-computer/Internet era tech boom would vault Rare Earths into high demand.)

Wheels are turning in the defense industrial sector on how to source critical metals. While public policy coalesces, the Molycorp-Molymet deal may offer a first hint from the private sector on how a multi-metal mining operation might position itself to meet strategic resource needs. American Resources will follow the policy debate for signs that awareness on the strategic resource issue is beginning to grow.

The post From rare earths to rare metals: Molymet takes a stake in Molycorp appeared first on American Resources Policy Network.

A nation already rich in a broad variety of mineral resources, Canada is known to also have significant REE deposits, which it is beginning to harness.  Having moved from exploratory drilling to development drilling at Quest Rare Minerals’ Strange Lake property on the Quebec-Labrador border, Canada was also recently sought out by Japan’s Toyota for a joint venture to expedite development of rare earth mines in Quebec.

While the U.S. is re-entering the REE market – Molycorp is taking the lead with the reopening of its Californian Mountain Pass mine here – Canada (and particularly Quebec, which has embraced a coordinated resource-development plan with its “Plan Nord”), is known to have a significantly better mining climate than the United States.  Our neighbors to the North are clearly maximizing their mining potential. Is the U.S. comfortable with riding bench?

The post Will Canada step in to fill REE void? appeared first on American Resources Policy Network.

The announcement comes only days after China once again tightened its rare earths export controls, and a few weeks after Molycorp acquired a majority share in the Estonian company Silmet (the other European rare earths producer besides Rhodia).  Once more, this collaboration illustrates that this isn’t your grandfather’s rare earths sector anymore, as companies and nations will look for innovative ways to react to new economic and geopolitical realities.

The post Rhodia, Areva team up to develop REE and Uranium appeared first on American Resources Policy Network.

Back then, Unocal had a division called Molycorp (the then-shuttered rare earths mine). We have talked about Molycorp here before – take a look. I find it interesting that had that particular deal gone through, then China would have controlled Molycorp altogether. Today, the $6 billion company leads the U.S. effort to reverse (yes, that’s right) Chinese domination of our rare earth resources.

Excerpt: Now China, which already controls 97 percent of the global rare earth metals production, is trying to buy up America’s rare earth deposits. And that’s just the tip of the iceberg; it’s also targeted our gold, lithium, oil, gas, molybdenum and other critical mineral and energy resources. The Japan/rare earth incident and China’s more truculent tone toward America should send some sobering messages.

The post China and Molycorp: what could have been appeared first on American Resources Policy Network.

Molycorp’s move shows us that this won’t be your grandfather’s Rare Earths sector. In today’s globalized economy, domestic resource development does not occur in a vacuum, and mining companies can enlarge their footprints — globally.

Industry analysts are going to examine this deal carefully, and they’ll have plenty of questions about the business case behind it. But at a time when resource-rich China, from which so many minerals and metals are currently sourced, is cutting back on exporting Rare Earths and other resources, we’re seeing the so-called “Rest of the World” react. Molycorp’s move won’t be the last.

The post Molycorp buys rare earths processor appeared first on American Resources Policy Network.