Australia’s HREE potential – just waiting for the sunrise (and a plan)

Now is the time for the Australian REE industry to double, and possibly re-double, its efforts to show its great future promise. There’s a growing sense of ennui that badly needs a circuit-breaker. As Frank Sinatra sang about “fighting vainly the old ennui”, so we need the next part of that song about getting a kick out of you [for which substitute “some REE action”]

We have two companies essentially becalmed while new CEOs get to grips with what the future holds. And one big positive: growing signs the country could be a powerhouse in the heavy rare earth sector but also there’s a sore need to have some thinking about rationalising it.

That, to me, sums up the state of the REE sector in Australia at the moment.

It’s hard for these companies at present, due largely to the awful state of the equity markets and the lack of investor interest in the sector. Just look at the prices: the following two figures are (a) the price of shares mid-afternoon today [Wednesday] Sydney time and (b) their 52-week high. It’s not pretty reading.

Alkane Resources (ALK) $1.325/$2.71

Arafura Resources (ARU) 30c/$1.384

Hastings Rare Metals (HAS) 13.5c/38.5c

Greenland Minerals & Energy (GGG) 45.5c/$1.00

Peak Resources (PEK) 34.5c/76c

Globe Metals & Mining (GBE) 19.5c/33c

Northern Minerals (NTU) $1.075/40c

TUC Resources (TUC) 19c/34c

Kimberley Rare Earths (KRE) 8.3c/23.5c

The point is that rare earths companies are being swept along with the general [miserable] market sentiment. When trading volumes overall in Australia have fallen to levels that are already leading to lay-offs at brokerages, you can see how hard it is for junior explorers to get investor interest or the notice of analysts. [I’m leaving Lynas out of this: it has its own unique issues.]

Meanwhile, Arafura and Krucible Metals (KRB) have new CEOs. The former is on the job and getting up to speed while the latter is waiting while the new man works out his three months’ notice at his present job. In fact, it will be interesting to see if KRB continues to get excited about the yttrium overlaying its phosphate project in Queensland; the chairman’s latest letter to shareholders talks only about the phosphate potential.

And then there’s the HREE scene.

We have several companies in northern Australia with these heavy elements -TUC Resources, Northern Minerals and Hastings Rare Metals spring to mind. We should also possibly add Crossland Uranium Mines (CUX) and Western Desert Resources (WDR) which have reported HREE in stream sediments and widespread indications of xenotime.

Readers will not need a reminder of the potential value of HREEs and how crucial they are. Incidentally, there’s a research project out on GBM Resources (GBZ) which I reported last month as producing a maiden resource in Queensland containing appreciable quantities of neodymium, yttrium, dysprosium and europium.

The research states (with my emphasis added): “The traditional classification of REEs into predominantly light rare earth elements (LREE) and/or heavy rare earth elements (HREE) are not necessarily important, but the presence of HREEs and a recent category known as the critical rare earth oxides (CREO) are important as they are considered to be the more valuable REEs in the foreseeable future.”

Yes, but I think that highlighted phrase muddies the waters. The first thing most REE followers do is seek just that sort of traditional classification.

But there is a more important point. And this is where you HREE enthusiasts come in.

What can be done to fast-track this Australian HREE story? China has the advantage of being able to order and coerce companies into merged entities, but is there something that can be done to harness the Australian HREE effort and make it more effective?

This is not a criticism of the companies involved. They are doing their best under existing arrangements. But we have a federal government in Canberra handing over hundreds of millions of dollars to prop up auto factories producing cars that cost too much, a billion dollars to compensate a brown coal using power station for the looming carbon tax and millions to plant trees in Indonesia while the highly strategic rare earth sector battles on unaided.

What can the private sector do to help?

Some kick-along is sure needed.

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