"How Japan Built a Rare-Earth Supply Chain Without China"

From the New York Times, December 8:

The 15-year effort by Japan is a model for countries now scrambling to reduce their dependence on Beijing’s critical metals. 

Sojitz, a Japanese conglomerate, turned to Lynas, an Australian mining company, to build a rare-earth supply chain outside China. Lynas mines in Australia and refines in Malaysia.

The world reacted with alarm this year when Beijing introduced waves of export controls on rare earths, the minerals vital to the manufacturing of everything from cars to advanced electronics. For Japan, the experience felt like déjà vu.

China maintains a near monopoly on the supply of the metals. Japan learned that the hard way in 2010 when China effectively cut it off during a territorial dispute between the countries. Tokyo has since quietly stitched together a supply chain that is considerably less dependent on China. For Japan, that is an important hedge to political risk, as a recent flare-up in tensions between the nations underscores.

As the United States and other nations scramble to secure rare earths outside China and build up their domestic supplies, Japan’s experience provides lessons in how it can be done, according to interviews with current and former government officials, business executives and industry experts in Japan.

“The urgency of the rare-earths situation is just now dawning on the United States and Europe,” said Naoki Kobayashi, an official working in the minerals division of Japan’s trade ministry. “For Japan, this painful lesson came 15 years ago,” he said.

President Trump has said he believes it will take the United States about a year to secure ample rare-earth supplies. But Japan is a case study in how hard it is to pull out of China’s grip — especially its extremely cost competitive rare-earth processing facilities. Experts say such an effort requires both sustained government support and international collaboration.

Supply Shock
In September 2010, a collision near disputed islands between a Chinese fishing trawler and two Japanese Coast Guard vessels escalated into a diplomatic and economic crisis. Japan detained the captain of the Chinese ship, and Beijing, in retaliation, implemented an unannounced, two-month embargo on rare-earth exports.

At first, the significance of China’s move was lost on some Japanese officials.

Tatsuya Terazawa was in charge of economic policy at Japan’s trade ministry in 2010. He recalled that the ministry’s lead auto industry official rushed to his desk, warning that the entire automotive supply chain could be suspended because of the sudden cutoff.

“I had to confess, I had zero knowledge about rare earths,” Mr. Terazawa said. He said his colleague explained that these materials were essential ingredients for the magnets used in motors across Japan’s auto sector. And Japan, like most industrialized nations, had ceded control of this vital supply almost entirely to China.

Mr. Terazawa was responsible for developing the trade ministry’s next suite of economic policies. He compiled a package, worth a little over $1 billion at the time, aimed at reducing Japan’s supply chain vulnerability to rare earths. It included substantial support for Japanese groups to diversify rare-earth sources.

“At the time, I was criticized that I was demanding much more money than necessary,” Mr. Terazawa said. “But I was determined that Japan never repeat this incident.”

Finding Lynas
The timing was, in some ways, opportune. Sojitz, a Japanese conglomerate, and Jogmec, the government body overseeing mineral resource security, were seeking non-Chinese rare-earth options. And Lynas, an Australian mining company, was dealing with financial difficulties.

Lynas was trying to create the world’s first integrated rare-earths supply chain without using China, instead mining the ores in Australia and refining them in Malaysia. But it was struggling to amass the capital it needed to increase production at its Malaysian refining site.

Sojitz had to find sources of rare earths outside China. Without stable supplies, “factories in many places would have to stop operating,” said Kosuke Uemura, the chief executive of Sojitz. At the time, “Lynas was the only option,” he said.

In 2011, Jogmec and Sojitz did a deal that provided $250 million in loans and equity to Lynas. The transaction secured for Japan a long-term supply of rare earths sourced outside China.

Today, in Western Australia, workers on the remote Mount Weld volcanic plug are flown out from Perth on rotations to extract rare-earth ore from an open-pit mine owned by Lynas

The partially purified concentrate is then shipped 5,000 miles to the company’s facility in Kuantan, Malaysia — until this year, the only large-scale rare-earth separation plant operating outside China. There, the materials are refined through a chemical process into individual rare-earth oxides pure enough to use in manufacturing.

From Malaysia, the metals are transported another 3,000 miles to Japan, where Sojitz manages distribution to domestic magnet makers. In Japan, the magnets are used in a number of products, including vehicles produced by automakers like Toyota.

Early Challenges
Japan has significantly bolstered its supply chain resilience. While industry estimates placed Japanese rare-earth imports from China at 90 percent or more during the 2010 trade dispute, that figure now stands closer to 60 percent to 70 percent.

Sojitz received its first large shipments of rare earths from the Malaysia facility in 2012 and has continued to expand the breadth of metals it imports. In October, it added a type of specialized, heat-resistant magnet ingredients to its portfolio.

According to Mr. Uemura, the Sojitz chief executive, the toughest bottleneck was the refining process in Malaysia. The chemical separation of rare earths produces large volumes of acidic waste and thousands of tons of low-level radioactive residue. Proper management and disposal of the waste is expensive and time consuming.

Between 2011 and 2012, the Lynas facility in Malaysia faced months of delays because of fierce local opposition and legal challenges. The facility began operating only after it revised its residue management plan multiple times.

In contrast, Chinese processing factories are often lightly regulated, and some illegally operated, creating toxic waste sites.

As a result, Mr. Uemura said, Sojitz and Lynas have higher costs than Chinese rivals and require public backing. “If we were to compete normally with China, we’d be playing on a different field altogether,” he said. “This gap is absolutely unbridgeable.”

Export Controls
This year, China introduced expansive rare-earth export controls, first in April and again in October, restricting the materials themselves and the processing technology. Beijing’s measures targeted all exports, not just those bound for Japan....

....MUCH MORE 

Some of our posts along the way: 

May 2021 - "Japan’s global rare earths quest holds lessons for the US and Europe"

The thing that stood out at the time was how open-minded the Japanese were about potential sources. If the scientists said they thought they could recover rare earths from sewage, the government said "Go find out" From offshore deposits? Ditto.*

October 2010:

"Japan Scrambles for Rare Earth" (AVL.TO; LYC.AX; MCP) 600111: Shanghai

 

Oct. 2010  

"Japan's rare earth minerals may run out by March" and Japan to Mine Sewage Sludge, E-Waste for Precious and REE Metals 

July 2011 
Rare Earths: Japan Finds Huge Undersea Deposits; German Industry Dubious; Stocks Droop (AVL; MCP; REE)

Stocks trade generally mournful and reflective.
In early premartket, Molycorp is down, $1.54 (2.57%) at $58.30, Rare Element is down 2.65% at $10.64 and Avalon is down 2.92%
Auspicious update, below....

Sept. 2011 
Predictions: Rare Earth Demand 2015-2020 (MCP; REE; AVL)

June 2012 

Japan Makes Huge Rare Earth Find

Japan has taken the rare earth sector very seriously since prices spiked ten-fold a couple years ago, some of our links are below the jump.

July 2021
Japan's Responses In the Event Of A Chinese Attack On Taiwan
You can see Japan's quandary if you follow the islands down to Okinawa and beyond.... 

January 2023
"Japan dives into rare earth mining under the sea"
It's taken them long enough.*

Here's an interesting map from the article, as we've said over the years, Japan has a real interest in who controls Taiwan:

And the reason I said Europe risks becoming a satrapy of China?

Absolutely brutal… 🇺🇸🇪🇺

The EU Commissioner of Industry:

"Last month, I was supposed to go to Brazil to discuss a rare earth mine. 3 days before, we were told that the Americans had already come, put money on the table, and bought all production until 2030." pic.twitter.com/rYLfLJcD0s

— Geiger Capital (@Geiger_Capital) December 9, 2025

The satrapy bit was the outro from December 8's "JPMorgan CEO Jamie Dimon says Europe has a ‘real problem’".

"The only five rare earth elements that matter"

I sometimes forget that many of our current readers weren't with us in the last rare earths mania/depression, that they don't share our memories of trading Molycorp (Mountain Pass mine, now resurrected as MP Materials) for three triples, short and long, on the blog, in public, from IPO to bankruptcy or if you will "From tombstone to tombstone".

Or a quaint little quote from a depression-era book that we posted every few months; one of the, if not the, best books on investing and life:

"...Words like 'uranium', 'rare earths', etc. seem to be magic to

 those unsuspecting who are often fleeced..."

Gerald M. Loeb

The Battle for Investment Survival

Simon & Schuster, 1935

So, here's some background. From Mining.com, June 19, 2012:

There is no single rare earth element market. Instead, the rare earth universe is made up of four or five distinct “critical rare earth” markets that should be the focus for investors today. Even with new mine supply and refining capacity coming on-line over the next four years, these elements will remain in short supply, with hefty price tags attached. In this exclusive interview with The Critical Metals Report, Institute for the Analysis of Global Security Senior Fellow Jack Lifton explains how investors can play a crucial role in building a supply chain outside of China. 

The Critical Metals Report: Can you give us an overview of the rare earth element (REE) market today? What are the most important trends you’re following?

Jack Lifton: The REE market today is going through a shakeout. We had a bubble last year—an anomalous speculative blip—that ran REE prices to the sky. It happened just as the junior miners were coming into full bloom. At that time, I would say most of the junior REE exploration companies were overvaluing their projects something fierce. Then the market herd jumped in and ran the prices way up.

Now that the speculative bubble has burst—and I think a lot of it had to do with China repositioning itself—we’re back to earth. I would guess that of the 250–260 listed REE public companies, there’s just one that is in production: Molycorp Inc. (MCP:NYSE). All of the valuations are coming down to earth.

Between 90–95% of the remaining junior miners will be wiped out. Investors should understand there is no single REE market. There is a market for some of the individual REEs—the critical REEs. But for at least half of the REEs, production and usage are tiny and there is no “market” to speak of.

For many REEs, production exceeds demand and will for the foreseeable future. Cerium is a good example of the fact that not all rare earth demand is equivalent. When you produce dysprosium, you are always producing much more cerium than dysprosium. That doesn’t mean that there is a market for cerium. In fact, it is more correct to say that some cerium/lanthanum/neodymium deposits contain recoverable dysprosium. Saying it this way really defines the problem.

I follow four or five critical REEs that each have individual markets. One of them is neodymium, because it’s the most important REE used in permanent magnets. The others are heavy rare earth elements (HREEs), including europium, terbium, dysprosium and yttrium. The latter isn’t really an REE, but it’s associated with them. As the market corrects to reasonable prices, people are coming to understand this....

....MUCH MORE 

"EV Makers Line Up at Europe’s Only Rare-Earths Magnets Site"

From Bloomberg, September 18/19: 

Executives from Europe’s electric-vehicle industry are trekking to the continent’s sparsely populated northeastern parts to queue for something they struggle to find outside of China: rare-earths magnets that are essential components in EVs.

In Narva, an Estonian industrial town that sits across the river from Russia, Canadian company Neo Performance Materials has built a $75 million magnets plant that opened on Friday. Neo’s initial output will supply components for as many as 1 million cars annually.

“Rare earths are on the top of every government’s list of critical materials,” Neo Chief Executive Officer Rahim Suleman said at the ribbon-cutting, which was also attended by Estonian Prime Minister Kristen Michal and representatives from General Motors Co. and parts suppliers Robert Bosch GmbH, Schaeffler AG and Mahle GmbH, among others.

Bosch, the world’s biggest automotive supplier, has reserved a “significant” share of the plant’s annual magnet production, Neo said in a statement on Friday after signing a multi-year memorandum of understanding with the German firm.

The plant in Estonia is offering a chance to lock in supply chains at a time of global trade tensions, including over rare earths with China. Europe and the world’s vulnerabilities were exposed earlier this year when Beijing in April heavily restricted the export of some of its rare earths in retaliation against US President Donald Trump’s decision to hike tariffs on Chinese goods.

Read More: EU Firms Face New Production Halts on China Rare Earth Delays

European Union companies incurred seven production stoppages in August because of shortages in rare earths, and an additional 46 are expected this month, the EU Chamber of Commerce in China said Thursday, without specifying the scale or nature of the affected facilities.

Neo’s Estonian plant manufactures neodymium magnets, one of the products restricted by China. The magnets convert the electricity stored in a battery into motion, helping rotate the wheels of EVs. They are also used widely from smartphones to wind turbines and fighter jets.

A shortage of rare earth magnet supplies earlier this year forced Ford Motor Co. to idle production of its Explorer sport utility vehicle in Chicago for a week.

Neo — which is also active in chemicals and metals and has 10 manufacturing plants globally, including in the United States and China — made the decision to build the new factory in Estonia in late 2022, months after Russia’s full-scale invasion of Ukraine disrupted Europe’s economy. Neo managed to complete its site on time and within budget, Suleman said.

“With the exception of Neo there is no EV traction motor magnet manufacturing capacity in the West,” Marvin Wolff, an analyst at Paradigm Capital, said in an Aug. 12 report.

The plant will initially produce 2,000 tons of magnets per year, about a tenth of the demand in Europe. The factory will source its own raw materials from Australia....

....MUCH MORE 

 Related, July 2:
"Rare earth magnet users jolted into paying premium prices for ex-China supply"
From Reuters, July 1: 

• China's export controls disrupt rare earth magnet supply chains
• Automakers willing to pay premiums amid supply risks
• Building ex-China production will take years

LONDON/SEOUL, July 1 (Reuters) - For years, Rahim Suleman had reached out repeatedly to automakers and other potential clients to market the rare earth magnets from the plant his company was building in Estonia, one of just a handful outside dominant producer China. 

But after April 4, when Beijing imposed new restrictions on the super-strong magnets used in electric vehicles and wind turbines, Suleman retired his sales pitch. He didn't need it any more. 

Ever since China's export controls tightened some rare earth exports to a trickle in the midst of a trade war with the U.S., causing chaos in supply chains and some auto plant shutdowns, "the phone is ringing off the hook", said Suleman.

 

Companies starting new plants in Europe, the U.S. and Asia had previously reported difficult talks on deals that embedded the higher costs to make magnets outside China, which benefits from cheaper labour costs and economies of scale as well as government support via tax refunds. 

But the crisis has led many customers to soften or drop objections about paying those premiums as they scramble to hammer out deals, according to a dozen industry participants including automakers, magnet makers, rare earth producers, consultants and government officials interviewed by Reuters.

 

While rare earths magnets from China are beginning to flow again, customers remain on edge about the threat of future shortages....

....MUCH MORE, it's a major article. 

 One of the companies mentioned, Neo Performance Materials was also seen in October 2024's "Pssst: Dysprosium" and a few times after Molycorp (MP Materials after the bankruptcy) aquired NEO.to:

Molycorp Looks Set to Open at New All-time Low (MCP)
"It began as a twisted dream..."
Nah, it was a Goldman deal.*

"Rare earth magnet users jolted into paying premium prices for ex-China supply"

From Reuters, July 1: 

• China's export controls disrupt rare earth magnet supply chains
• Automakers willing to pay premiums amid supply risks
• Building ex-China production will take years

LONDON/SEOUL, July 1 (Reuters) - For years, Rahim Suleman had reached out repeatedly to automakers and other potential clients to market the rare earth magnets from the plant his company was building in Estonia, one of just a handful outside dominant producer China. 

But after April 4, when Beijing imposed new restrictions on the super-strong magnets used in electric vehicles and wind turbines, Suleman retired his sales pitch. He didn't need it any more. 

Ever since China's export controls tightened some rare earth exports to a trickle in the midst of a trade war with the U.S., causing chaos in supply chains and some auto plant shutdowns, "the phone is ringing off the hook", said Suleman.

 

Companies starting new plants in Europe, the U.S. and Asia had previously reported difficult talks on deals that embedded the higher costs to make magnets outside China, which benefits from cheaper labour costs and economies of scale as well as government support via tax refunds. 

But the crisis has led many customers to soften or drop objections about paying those premiums as they scramble to hammer out deals, according to a dozen industry participants including automakers, magnet makers, rare earth producers, consultants and government officials interviewed by Reuters.

 

While rare earths magnets from China are beginning to flow again, customers remain on edge about the threat of future shortages....

....MUCH MORE, it's a major article. 

 One of the companies mentioned, Neo Performance Materials was also seen in October 2024's "Pssst: Dysprosium" and a few times after Molycorp (MP Materials after the bankruptcy) aquired NEO.to:

Molycorp Looks Set to Open at New All-time Low (MCP)
"It began as a twisted dream..."
Nah, it was a Goldman deal.*

"The Consequences of China’s New Rare Earths Export Restrictions" (LYC.ax; MP)

From The Center for Strategic & International Studies, April 14:

On April 4, China’s Ministry of Commerce imposed export restrictions on seven rare earth elements (REEs) and magnets used in the defense, energy, and automotive sectors in response to U.S. President Donald Trump’s tariff increases on Chinese products. The new restrictions apply to 7 of 17 REEs—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—and requires companies to secure special export licenses to export the minerals and magnets.

Q1: To what extent will the most recent export restrictions on rare earths impact U.S. sourcing of these critical minerals for defense technologies?

A1: There are various types of export restrictions: non-automatic licensing, tariffs, quotas, and an outright ban. The new restrictions are not a ban; rather, they require firms to apply for a license to export rare earths. This development has three implications: first, there will likely be a pause in exports as the Chinese government establishes this licensing system. Second, there is also likely to be disruptions in supply to some U.S. firms given that the announcement also placed 16 U.S. entities on its export control list, limiting them from receiving dual-use goods. All but one of the firms on the list are in the defense and aerospace industries. It is unclear how China will implement the new licensing system. And third, the licensing system may be dynamic and could incentivize countries across the world to cooperate with China to prevent disruptions in their rare earths supply.

Q2: What is the significance of the focus on heavy rare earths given U.S. supply chain vulnerabilities?

A2: The restrictions apply to seven medium and heavy rare earths: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. The United States is particularly vulnerable for these supply chains. Until 2023, China accounted for 99 percent of global heavy REEs processing, with only minimal output from a refinery in Vietnam. However, that facility has been shut down for the past year due to a tax dispute, effectively giving China a monopoly over supply. China did not impose restrictions on light rare earths, for which a more diverse set of countries undertake processing.

Q3: Why are rare earths significant to U.S. national security?

A3: REEs are crucial for a range of defense technologies, including F-35 fighter jets, Virginia- and Columbia-class submarines, Tomahawk missiles, radar systems, Predator unmanned aerial vehicles, and the Joint Direct Attack Munition series of smart bombs. For example, the F-35 fighter jet contains over 900 pounds of REEs. An Arleigh Burke-class DDG-51 destroyer requires approximately 5,200 pounds, while a Virginia-class submarine uses around 9,200 pounds.

The United States is already on the back foot when it comes to manufacturing these defense technologies. China is rapidly expanding its munitions production and acquiring advanced weapons systems and equipment at a pace five to six times faster than the United States. While China is preparing with a wartime mindset, the United States continues to operate under peacetime conditions. Even before the latest restrictions, the U.S. defense industrial base struggled with limited capacity and lacked the ability to scale up production to meet defense technology demands. Further bans on critical minerals inputs will only widen the gap, enabling China to strengthen its military capabilities more quickly than the United States.

Q4: Is the U.S. rare earths industry ready to fill the gap in the event of a shortfall?....

....MUCH MORE

Although MP Materials is getting the attention in the U.S., Australia's Lynas has a better mix of the various rare earths.

If interested we have quite a few posts on both, in the case of MP back before the bankruptcy and reorg, when it was known as Molycorp, e.g. 2011's

Molycorp Beats; Raises; Decries Shortsellers as Spawn of Satan (MCP)
[a close reading of the press release reveals there is no use of the term 'Spawn of Satan' -ed]

Often introducing a post with a quote from one of the, if not the, best books on investing and life:

...Words like "uranium", "rare earths", etc. seem to be magic to

 those unsuspecting who are often fleeced...

Gerald M. Loeb

The Battle for Investment Survival

Simon & Schuster, 1935

If interested use the 'search blog' box upper left: Molycorp and Lynas.

Always keeping in mind it's the refining capacity that is the rare bit.
(not to be confused with the Welsh dish)

"Rare Earths Reality Check: Ukraine Doesn't Have Minable Deposits Experts say proposed deal with U.S. makes no sense"

Astute reader may have noticed we've had no comment on "Ukrainian rare earths". The headline is accurate.

However, Ukraine does have $10 - 12 trillion of other resources: titanium, iron, neon, nickel and lithium (largest minable deposit in Europe.)

Throw in the beryllium, niobium, tantalum, titanium and cobalt, along with uranium and feldspar and it starts adding up.

From IEEE Spectrum, March 7:

When a seemingly routine Oval Office press conference degenerated into a shouting match on 28 February, the world looked on in astonishment. That is, except for actual experts in rare earths and other critical materials, who understood all along that the proposed “deal” that motivated the press conference was nonsensical and could only be viewed as political theater.

The meeting was supposed to announce an agreement under which Ukraine would provide U.S. companies with access to critical minerals deposits in exchange for the tens of billions of dollars in military aid already provided by the U.S. government. According to the Center for Strategic and International Studies, the agreement would have established “a reconstruction investment fund with joint U.S. and Ukraine ownership. Ukraine will contribute 50 percent of all revenues earned from the future monetization of all Ukrainian government-owned natural resource assets into the fund.” Ukraine has substantial reserves or deposits of lithium, graphite, manganese, titanium, gallium, and nickel. However, in describing the proposed deal, president Donald J. Trump and other principals quickly zeroed in on the rare earths, for which the US has for years been spending billions of dollars in an attempt to secure stable supplies.

The Trump administration, like those before it, seems to grasp the importance of these materials. At his confirmation hearing, Secretary of State Marco Rubio said, “If we stay on the road we’re on right now, in less than 10 years, virtually everything that matters to us in life will depend on whether China will allow us to have it or not … They have come to dominate the critical-mineral industry supplies throughout the world.”

The Ukraine rare-earths deal now seems endangered, to put it mildly. But its apparent failure—and the way it failed—is revealing of how the Trump administration is likely to pursue supplies of strategically vital rare earths and other critical materials in the context of trade and international policies that are freezing out not just China but also longtime economic and military allies, while welcoming a longstanding adversary, Russia. China dominates production of numerous critical metals and minerals, but none so completely as the rare earths. More than 95 percent of industrially useful rare-earth metals are produced by China, creating supply-chain and national-security vulnerabilities that the U.S. and other countries have been attempting to ameliorate for more than a decade.

Ukraine Doesn’t Actually Have Minable Rare Earths

To begin with, the contentious 28 February Oval Office meeting can’t be understood without a crucial piece of context: there are no deposits of rare-earth ore in Ukraine known to be minable in an economically viable way. And that would be true even if full-scale warfare were not raging in the country’s east, where a great deal of its mineral resources are concentrated.

Ukraine is believed to have four areas with substantial deposits of rare earth ores, according to Erik Jonsson, senior geologist with the Geological Survey of Sweden. “There are four slightly bigger deposits: Yastrubetske, Novopoltavske, Azovske, and Mazurivske. All but one of them seem to be now within or near the zone that the Russians control, as far as I can tell,” says Jonsson. “And when it comes to resources in those deposits, I mean, we have numbers; yes, that’s nice. But we have no real, detailed, outline of how those numbers were arrived at.” The numbers are believed to come from Soviet surveys dating as far back as the 1960s.

“The rare-earth deposits don’t look that relevant,” Jonsson concludes. “I mean, I wouldn’t go for them.” Two of the deposits are dominated by a mineral called britholite, he notes, which is not desirable because it has not been processed for rare earths, which means that almost nothing exists in the way of process chemistry and equipment.

“If you want critical minerals, Ukraine ain’t the place to look for them,” declares Jack Lifton, executive chairman of the Critical Minerals Institute. “It’s a fantasy. There’s no point to any of this. There’s some other agenda going on here. I can’t believe that anybody in Washington actually believes that it makes sense to get rare earths in Ukraine.”

Even without a war to contend with, it would take at least 15 years to build a mine to begin extracting rare-earth ore on a large scale, Lifton notes. And according to the terms of the draft critical materials deal, private companies would have to invest huge sums, likely a billion dollars or more, to develop rare-earths mines in Ukraine. It’s a possibility that Lifton, an IEEE member and former metals trader, dismisses as absurd. He notes that a multinational mining company, Rio Tinto Group, has spent close to US $3 billion on potential mine sites in Arizona and Alaska and still does not have the necessary licenses and permits from the U.S. Government to begin building a mine in either place.

What is Trump’s rare-earth agenda?....

....MUCH MORE

Over the years we visited Mr. Lifton many, many times. Here's a post that wraps some of those earlier visits. From August 2017 "Electric Vehicles: An Old Pro On Battery Technology and Policy and China":

Back in the glory days of the rare earth fad we would visit the author of the current piece, Jack Lifton:

June 21, 2010
Climateer Line of the Day: Rare Earth Edition 
From Jack Lifton writing at Technology Metals Research: 

Rare earths are nowhere near as important to the China State Council as they are to Western stock promoters, trying their P.T. Barnum Best to get us alarmed over a non-existent direct threat, from a battered industry in a country trying to raise its standard of living and meet stated national economic goals....

-Chinese Production of Rare Earths: The Real Crisis

Our last post linking to Mr. Lifton:

"Afghan Lithium And Other Mineral Nonsense"

Good times.
Here's a 2015 post looking back to those halcyon days:

Rare earth metals: Objects of power and risk

Just the words, "Rare Earth" brings back memories: “My old MG TC. A blond girl, tan from the summer sun, in the Hamptons, beer on the beach, ‘Unchained Melody,’ the little bar in the Village.”

Uh, wait. That was Adam Smith in our 2012 post  "Adam Smith on Oil Shale (Now with Voodoo Beach Bunnies)". Ahem. Never mind.

Our memories are more like trading Molycorp for three triples, short and long, on the blog, in public, from IPO to bankruptcy or if you will "From tombstone to tombstone".

Or commenting on the passing parade: Luxembourg-based Rare Earth Company Hoping to Mine in South Africa by 2014 Does Oversubscribed IPO in Toronto (FRO.tsx), or quoting one of the, if not the, best books on investing and life:

"...Words like 'uranium', 'rare earths', etc. seem to be magic to

 those unsuspecting who are often fleeced..."

Gerald M. Loeb

The Battle for Investment Survival

Simon & Schuster, 1935

And many more.

"China wants role in US-Vietnam rare earths plan"

From Asia Times, December 17:

Chinese pundits say Vietnam should not directly export rare earths but send them to the PRC for processing  

Following the conclusion of President Xi Jinping’s Hanoi trip earlier this week, China has claimed itself to be Vietnam’s best choice for trade and diplomatic partnerships in the Asia Pacific region.

Perhaps, but the proof will be in the pudding. Will Vietnam directly export its rare earths, as the US hopes, or send them for processing in China? Chinese pundits want to know. They also want to know whether Hanoi will lease a military port to Washington.

On Wednesday, China and Vietnam signed 36 agreements, covering the Belt and Road Initiative, development cooperation, digital economy, green development, transportation, inspection and quarantine, defense and law enforcement and maritime cooperation. But Vietnamese media said Beijing and Hanoi have failed to reach agreements on nine other issues, including metals and rare earths mining. 

During his own trip to Hanoi in September, US President Joe Biden signed deals with Vietnam on semiconductors and rare earths. He encouraged US investment in rare earth exploration in Vietnam – which is ranked third in the world in its rare earths potential – to counter China’s world domination of the minerals.

Rare earths
Some Chinese pundits said China will boost trade and investments with Vietnam as long as Hanoi continues to maintain a good relationship with Beijing. They said if Vietnam is going to use US investment to explore its rare earth reserves, it should consider shipping the deposits to China for refining....

....MUCH MORE

That sounds vaguely menacing. Probably because there is a steel fist behind the velvet glove.

Previously:
"A tiger economy starts to roar in Vietnam" (except for the rare earth industry corruption)

"Rare earths magnet firms turn to Vietnam in China hedge"
Well it's about time.*

*****

*We've been touting Vietnam for a few years and gathered some of the older links in May, 14, 2023's "Vietnam boosts rare earths output by tenfold – data":

Recently:
Rare Earth Feedstock Deficit For Neodymium Magnets Forecast To Reach 60,000 Tonnes Annually Within 7 Years 

And as noted in "Rare Earths: Reminder, Combined Brazilian and Vietnamese Resource Base Approximately Equals China's Proven and Probable Reserves":
Mining the stuff is relatively straightforward. The huge difference is that Brazil and Vietnam do not have the refining and fabricating infrastructure that China does....

 And 2021's "Europe’s Rare Earth Dependency Dilemma":

....As I've been babbling for the last few years: Vietnam!

Here's the US Geological Survey's Mineral Commodity Survey - Rare Earths - 2021:

                 Reserves
Brazil      21,000,000
China      44,000,000
Vietnam  22,000,000

[Data in metric tons of rare-earth-oxide (REO) equivalent content unless otherwise noted] 

You will note that Vietnam and Brazil's combined resource roughly equals China's....

And July 2020's "Digging in on rare earth, the next front in the US supply chain war with China":

Letting China take over the world's pharmaceutical and medical manufacturing over the last 25 years was pretty damn stupid.
Ditto for rare earth supply/
The stuff is everywhere, Vietnam's undeveloped rare earth resource base is tied with Brazil for #2 in the world (combined they match China).
The risk Vietnam poses to China's lock on rare earth prices  has suddenly gotten very interesting.
It has to be developed though....

And June 2019
Vietnam Rising: "US-China trade war pushing Vietnam’s manufacturing industry to capacity"

A major piece on the country The Diplomat says will be the testing ground for China's military, prior to an invasion of Taiwan. See last month's "China Will Attack Vietnam".

Throw in Vietnam's undeveloped rare earth resource base, tied with Brazil for #2 in the world (combined they match China) and the risk it poses to China's lock on prices and Vietnam has suddenly gotten very interesting.
Oh, and China is still smarting from being unable to achieve their goals during the 1979 invasion of Vietnam....

We have some experience with this stuff, both long and short, out in public on the blog for all the world to see. Here's a quote, first used in late 2010 as the last mania was just getting started, from a very good book on investing, that was our lodestone (mining/magnet term) through the last mania.

And a 2015 post looking back to those halcyon days:
Rare earth metals: Objects of power and risk

Just the words, "Rare Earth" brings back memories: “My old MG TC. A blond girl, tan from the summer sun, in the Hamptons, beer on the beach, ‘Unchained Melody,’ the little bar in the Village.”

Uh, wait. That was Adam Smith in our 2012 post  "Adam Smith on Oil Shale (Now with Voodoo Beach Bunnies)". Ahem. Never mind.

Our memories are more like trading Molycorp for three triples, short and long, on the blog, in public, from IPO to bankruptcy or if you will "From tombstone to tombstone".

Or commenting on the passing parade: Luxembourg-based Rare Earth Company Hoping to Mine in South Africa by 2014 Does Oversubscribed IPO in Toronto (FRO.tsx), or quoting one of the, if not the, best books on investing and life:

"...Words like 'uranium', 'rare earths', etc. seem to be magic to

 those unsuspecting who are often fleeced..."

Gerald M. Loeb

The Battle for Investment Survival

Simon & Schuster, 1935

Another 2023 post on rare earths, this one January 14:

"Huge rare earth metals discovery in Arctic Sweden"
They aren't that rare. Just hard to find in the right proportions of the different rare earth elements. And in concentrations high enough to make extraction a paying proposition.

And requiring some technical expertise to fabricate into end products. It's not as if there are neodymium magnets just laying around... 

And in 2022's "Huge rare earth reserve discovered in Turkey, but experts caution that ‘grade is king’"

Not just grade. The composition of a deposit, the amounts of the 17 rare earth elements is critical. As one example, the Mountain Pass mine in the U.S. despite its relatively high grade (8% REEs) is actually not as valuable as some lower grade mines with a more profitable mix.

Additionally, exploitation of a REE resource is highly dependent on processing and supply chain factors that can not quickly be brought into being, it's one thing to have the deposit, quite another to have, for example, the end product, a neodymium magnet.

"Rare earths magnet firms turn to Vietnam in China hedge"

Well it's about time.*

From Reuters, August 22:

• Korean firm plans factory that alone could meet half U.S. demand
• Chinese Apple supplier to open magnet plant this year -sources
• Vietnam's rare earths deposits second only to China's
• China dominates world's magnet supply

HANOI/SEOUL, Aug 22 (Reuters) - Korean and Chinese magnet firms, including an Apple supplier, are set to open factories in Vietnam, according to documents and people familiar with the plans, amid a push to diversify supply chains away from China and defend against Sino-U.S. tension.

South Korea's Star Group Industrial (SGI) and China's Baotou INST Magnetic would join companies in sectors as varied as electronics and automobiles in shifting assembly lines against a backdrop of increasing trade restrictions, with clients even requesting the move, the people said.

China is dominant in magnets and the rare earth metals they are made from. The magnets are central to the manufacturing of such products as electric vehicles, wind turbines, weapons and smartphones, making the sector strategically important. Even so, there has been only limited effort to challenge China's lead.

Neighbouring Vietnam, however, has untapped rare earth deposits second only to China's, as well as a fledgling processing industry, giving the country the potential to be a much bigger competitor, industry insiders said.

SGI's Vietnam project, for instance, targets 2025 output of 5,000 tons of high-end neodymium (NdFeB) magnets per year, enough for 2 million electric vehicles (EVs).

Still, Vietnam produces just 1% of the world's magnets, showed Adamas Intelligence data cited in a U.S. Department of Energy report, compared with China's 92%.

Moreover, some Chinese factories can produce 10 times as many magnets as SGI's project, and China dominates the mining and processing of the ores.

Nevertheless, Vietnam's rise is significant....

....MUCH MORE

*We've been touting Vietnam for a few years and gathered some of the older links in May, 14, 2023's "Vietnam boosts rare earths output by tenfold – data":

Recently:
Rare Earth Feedstock Deficit For Neodymium Magnets Forecast To Reach 60,000 Tonnes Annually Within 7 Years 

And as noted in "Rare Earths: Reminder, Combined Brazilian and Vietnamese Resource Base Approximately Equals China's Proven and Probable Reserves":
Mining the stuff is relatively straightforward. The huge difference is that Brazil and Vietnam do not have the refining and fabricating infrastructure that China does....

 And 2021's "Europe’s Rare Earth Dependency Dilemma":

....As I've been babbling for the last few years: Vietnam!

Here's the US Geological Survey's Mineral Commodity Survey - Rare Earths - 2021:

                 Reserves
Brazil      21,000,000
China      44,000,000
Vietnam  22,000,000

[Data in metric tons of rare-earth-oxide (REO) equivalent content unless otherwise noted] 

You will note that Vietnam and Brazil's combined resource roughly equals China's....

And July 2020's "Digging in on rare earth, the next front in the US supply chain war with China":

Letting China take over the world's pharmaceutical and medical manufacturing over the last 25 years was pretty damn stupid.
Ditto for rare earth supply/
The stuff is everywhere, Vietnam's undeveloped rare earth resource base is tied with Brazil for #2 in the world (combined they match China).
The risk Vietnam poses to China's lock on rare earth prices  has suddenly gotten very interesting.
It has to be developed though....

And June 2019
Vietnam Rising: "US-China trade war pushing Vietnam’s manufacturing industry to capacity"

A major piece on the country The Diplomat says will be the testing ground for China's military, prior to an invasion of Taiwan. See last month's "China Will Attack Vietnam".

Throw in Vietnam's undeveloped rare earth resource base, tied with Brazil for #2 in the world (combined they match China) and the risk it poses to China's lock on prices and Vietnam has suddenly gotten very interesting.
Oh, and China is still smarting from being unable to achieve their goals during the 1979 invasion of Vietnam....

We have some experience with this stuff, both long and short, out in public on the blog for all the world to see. Here's a quote, first used in late 2010 as the last mania was just getting started, from a very good book on investing, that was our lodestone (mining/magnet term) through the last mania.

And a 2015 post looking back to those halcyon days:
Rare earth metals: Objects of power and risk

Just the words, "Rare Earth" brings back memories: “My old MG TC. A blond girl, tan from the summer sun, in the Hamptons, beer on the beach, ‘Unchained Melody,’ the little bar in the Village.”

Uh, wait. That was Adam Smith in our 2012 post  "Adam Smith on Oil Shale (Now with Voodoo Beach Bunnies)". Ahem. Never mind.

Our memories are more like trading Molycorp for three triples, short and long, on the blog, in public, from IPO to bankruptcy or if you will "From tombstone to tombstone".

Or commenting on the passing parade: Luxembourg-based Rare Earth Company Hoping to Mine in South Africa by 2014 Does Oversubscribed IPO in Toronto (FRO.tsx), or quoting one of the, if not the, best books on investing and life:

"...Words like 'uranium', 'rare earths', etc. seem to be magic to

 those unsuspecting who are often fleeced..."

Gerald M. Loeb

The Battle for Investment Survival

Simon & Schuster, 1935

"Vietnam boosts rare earths output by tenfold – data"

 From Reuters via Mining.com:

Vietnam’s mined output of rare earths soared tenfold last year, US data showed, as global firms have flocked to the Southeast Asian country with the world’s second largest estimated deposits to reduce reliance on China for the key industrial metals.

Past attempts to build up Vietnam’s rare earth industry have stuttered due to falling prices and regulatory hurdles, but growing sales of electric vehicles (EVs) and firms’ efforts to diversify their suppliers has revived interest in Vietnam.

Australian Strategic Materials Ltd (ASM) said on Monday that it would buy 100 tonnes of rare earth oxides this year from Vietnam Rare Earth Co and is looking for a longer term supply agreement.

ASM said a longer-term agreement with the Vietnamese firm would provide it with a multi-source feedstock option and additional supply security for its processing plant in South Korea.

Rare earths are a group of elements that have applications in electronics manufacturing and batteries, making them important for the global transition towards cleaner sources of energy and in defence.

Vietnam’s rare earth mine production jumped to 4,300 tonnes last year from 400 tonnes in 2021, according to the United States Geological Survey (USGS), a government agency....

....MUCH MORE

Recently:
Rare Earth Feedstock Deficit For Neodymium Magnets Forecast To Reach 60,000 Tonnes Annually Within 7 Years 

And as noted in "Rare Earths: Reminder, Combined Brazilian and Vietnamese Resource Base Approximately Equals China's Proven and Probable Reserves":
Mining the stuff is relatively straightforward. The huge difference is that Brazil and Vietnam do not have the refining and fabricating infrastructure that China does.

We have some experience with this stuff, both long and short, out in public on the blog for all the world to see. Here's a quote, first used in late 2010 as the last mania was just getting started, from a very good book on investing, that was our lodestone (mining/magnet term) through the last mania.

And a 2015 post looking back to those halcyon days:
Rare earth metals: Objects of power and risk

Just the words, "Rare Earth" brings back memories: “My old MG TC. A blond girl, tan from the summer sun, in the Hamptons, beer on the beach, ‘Unchained Melody,’ the little bar in the Village.”

Uh, wait. That was Adam Smith in our 2012 post  "Adam Smith on Oil Shale (Now with Voodoo Beach Bunnies)". Ahem. Never mind.

Our memories are more like trading Molycorp for three triples, short and long, on the blog, in public, from IPO to bankruptcy or if you will "From tombstone to tombstone".

Or commenting on the passing parade: Luxembourg-based Rare Earth Company Hoping to Mine in South Africa by 2014 Does Oversubscribed IPO in Toronto (FRO.tsx), or quoting one of the, if not the, best books on investing and life:

"...Words like 'uranium', 'rare earths', etc. seem to be magic to

 those unsuspecting who are often fleeced..."

Gerald M. Loeb

The Battle for Investment Survival

Simon & Schuster, 1935

"Japan dives into rare earth mining under the sea"

It's taken them long enough.*

From Asia Times, January 10:

Japanese move aims to cut current 60% dependence on China and become self-sufficient by end of the decade  

Japan’s effort to mine the seabed is moving from the research and development stage toward resource extraction as technological advance is spurred by the demands of national economic security.

If all goes according to plan, Japan’s current dependence on China for its rare earth metal supplies could be greatly reduced or eliminated by the end of the decade. China currently dominates global production, processing about 85% of the world’s rare earths.

Japan’s new National Security Strategy document, released in December, states that “with regard to supply chain resilience, Japan will curb excessive dependence on specific countries.” 

Furthermore, it will “secure stable supply for critical goods including rare earth, and promote capital reinforcement of private enterprises with critical goods and technologies, and strengthen the function of policy-based finance, in pursuit of protecting and nurturing critical goods.”

The English version is stamped “Provisional Translation,” but the statement is consistent with the original Japanese.

Rare earth metals are a group of 17 heavy metal elements, some of which are of critical importance to the manufacture of electric vehicle motors (dysprosium), wind power generators (neodymium) and other electronic devices. They are used in magnets, batteries, lasers and many other industrial products and processes.

Japan currently imports about 60% of its rare earth metals from China, but they are available in large quantities on the sea floor – if they can be accessed.

Last August and September, Japanese marine engineers working under the auspices of the Cabinet Office’s Cross-ministerial Strategic Innovation Promotion Program succeeded in pumping up seabed material from a depth of nearly 2,500 meters in the waters near Minami-Torishima....

....MUCH MORE
Here's an interesting map from the article, as we've said over the years, Japan has a real interest in who controls Taiwan:

*Previously:
October 2022
"Breaking China’s grip on rare earths markets a ‘pipe dream,’ Australia says"

Better to stick with the battery metals right now, though nickel is going into surplus this quarter or next, copper is as sensitive to the slowdown in Chinese housing construction as it is to upside in the green revolution, cobalt is on the way out of battery chemistry if Mr. Musk has his way and lithium has gotten so expensive it is now a bottleneck on the final-price of electric vehicles.

Of the four we are betting copper trades down to last summer's low of $3.13, and maybe below $3.00 before turning into a shiny red rocketship.

On the headline stuff, somewhere between 2010 and today the U.S. and the West lost their way on the rare earths and we've only posted sporadically since the  Happy Time™ with MolyCorp and all the little scams, all the while reflecting back on what's probably the best book on investing that's been written since de la Vega's Confusion de Confusiones (Amsterdam, 1688):

...Words like "uranium", "rare earths", etc. seem to be magic to

 those unsuspecting who are often fleeced...

Gerald M. Loeb

The Battle for Investment Survival

Simon & Schuster, 1935

June 2022 "Huge rare earth reserve discovered in Turkey, but experts caution that ‘grade is king’"

Not just grade. The composition of a deposit, the amounts of the 17 rare earth elements is critical. As one example, the Mountain Pass mine in the U.S. despite its relatively high grade (8% REEs) is actually not as valuable as some lower grade mines with a more profitable mix.

Additionally, exploitation of a REE resource is highly dependent on processing and supply chain factors that can not quickly be brought into being, it's one thing to have the deposit, quite another to have, for example, the end product, a neodymium magnet.

We have some experience with this stuff, if interested see after the jump....

(we've been tracking the doings of the big dog since 2009's "With a Name Like Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., it has to be good (600111:Shanghai)"

If you are interested, I believe MolyCorp's Mountain View mine ended up in Chinese hands leaving Australia's Lynas Corp (LYC.ax) as probably the best in the West. (mentioned in the story below)....
May 2021
"Japan’s global rare earths quest holds lessons for the US and Europe"
The thing that stood out at the time was how open-minded the Japanese were about potential sources. If the scientists said they thought they could recover rare earths from sewage, the government said "Go find out" From offshore deposits? Ditto.*

June 2012  

Japan Makes Huge Rare Earth Find

July 2011 
Rare Earths: Japan Finds Huge Undersea Deposits; German Industry Dubious; Stocks Droop (AVL; MCP; REE)

Stocks trade generally mournful and reflective.
In early premartket, Molycorp is down, $1.54 (2.57%) at $58.30, Rare Element is down 2.65% at $10.64 and Avalon is down 2.92%
Auspicious update, below.

Oct. 2010 
"Japan Scrambles for Rare Earth" (AVL.TO; LYC.AX; MCP) 600111: Shanghai
Oct. 2010 
"Japan's rare earth minerals may run out by March" and Japan to Mine Sewage Sludge, E-Waste for Precious and REE Metals 

And recently in geopolitics:
Chips: Taiwan, Japan Eye 'All Round Cooperation'
China's Emperor Xi And The Threat To Destroy Japan
Japan's Responses In the Event Of A Chinese Attack On Taiwan
You can see Japan's quandary if you follow the islands down to Okinawa and beyond....

"Copper price falls on Chinese demand fears"

Lifted in toto from Reuters and Mining.com, November 7:

Copper prices fell on Monday after China reaffirmed its stringent covid-19 restrictions and data reinforced demand worries.

After its best trading day in years on Friday, copper for December retreated by 2.6% in New York to exchange hands for $3.593 per pound ($7,904 a tonne) in midday trade.

“China’s zero-covid policy is not the only problem,” said Julius Baer analyst Carsten Menke. “Removing that policy won’t fix the property market … wiring in buildings and households account for a large proportion of copper demand.”

China’s property market continued its slump in October, with private data showing home prices and sales falling, while trade data showed imports of unwrought copper and copper products fell 1.5% in October from the same period a year ago.

The country’s zero-covid approach and lockdowns have squeezed its manufacturing sector and hit demand for industrial metals.

“Easing lockdowns ahead of winter – as China’s covid infections are rising – seems an irrational bull case for investors,” Liberum analyst Tom Price said in a note.

(With files from Reuters)

Mining.com home

Most active futures down 0.0215 (.60%) at 3.5820

Welcome to my world. We thought the market's misapprehension of what was going on in China was important enough to make three posts on Sunday: 

"No relief for the people: China to 'unswervingly' stick to its zero-COVID policy, says health official"

"Copper price back above $8,000 on China reopening hopes" 

Table Tennis, the Chinese Communist Party lifted the covid restrictions for a table tennis tournament.

Regarding the country as a whole, the leadership has to crush the dreams of the middle class lest they become too powerful and fall away from the Party leadership. - coming up....

‘Let it rot’: Once-flourishing middle class faces end of ‘Chinese Dream’

And regarding the Chinese property market:

May 2022
Copper: It Is All About China's Economy 

If China ever begins tearing down the tens of millions of apartments that are sitting empty the amount of supply from copper that will be recycled is mind boggling. Barring that, the huge cutback in residential construction has taken one of the largest demand factors out of the equation and except for the run-up in price we saw immediately after Russia invaded Ukraine, when it appeared China was converting their foreign exchange holdings into just about any kind of tangible stuff that would be storable, grains, metals etc., the trend since the Shanghai lockdowns became widely publicized has been pretty much unidirectional....

September 1, 2022
"China tears down tower blocks in effort to boost stalling economy" (plus Keynes and copper)

 

October 31, 2022 

Breaking China’s grip on rare earths markets a ‘pipe dream,’ Australia says"

Better to stick with the battery metals right now, though nickel is going into surplus this quarter or next, copper is as sensitive to the slowdown in Chinese housing construction as it is to upside in the green revolution, cobalt is on the way out of battery chemistry if Mr. Musk has his way and lithium has gotten so expensive it is now a bottleneck on the final-price of electric vehicles.

Of the four we are betting copper trades down to last summer's low of $3.13, and maybe below $3.00 before turning into a shiny red rocketship.

On the headline stuff, somewhere between 2010 and today the U.S. and the West lost their way on the rare earths and we've only posted sporadically since the  Happy Time™ with MolyCorp and all the little scams, all the while reflecting back on what's probably the best book on investing that's been written since de la Vega's Confusion de Confusiones (Amsterdam, 1688...

That, of course, was posted four days before the covid reopening story possessed the market and the most active futures jumped  9 or 11%, I don't remember which, it was sort of a blur. 

Of course.

Welcome to my world.