Canada’s Rare Earth Doppler Effect – the Sound of Being Bypassed

Years ago, Japanese geologists wandered through North America’s outback, trying to identify to-die-for rare earth metal deposits; the car companies and manufacturers could see what was coming.

Today? Well, Japan is intent on working with the likes of Vietnam and, now, apparently, Kazakhstan.

The plan? Develop rare earth metals critical to electronics and automakers, in a bid to reduce dependence on China-sourced material, the Asahi Shimbum said this weekend.

Japan’s Trade Minister Yukio Edano will meet Kazakh government officials, including President Nursultan Nazarbayev, to sign the agreement in early May, making way for Sumitomo Corp, Japan Oil, Gas and Metals National Corp and Kazatoprom to partner in rare earth extraction, the paper said.

Interesting.

Definition of juxtaposition: to place or deal with close together for contrasting effect.

Months and months after what can only be described as a rare earths juggernaut, one that had shaken and stirred the Canadian stock markets, the Canadian Chamber of Commerce has leapt into action.

Enter a new report: “Canadian Rare Earth Deposits Can Offer a Substantial Competitive Advance.”

Here’s the funny bit: In a bid to turn back time, the press release announcing the report is misdated – Ottawa, April 26, 2011.

Definition of tragic irony: the full significance of a character’s words or actions are clear to the audience or reader although unknown to the character.

If this report had been released last April, the timing would have been closer to what some people describe as sublime.

A year later?

Molycorp and Neo Material Technologies.

Lynas and Malaysia (fingers crossed all)…

…. and then, of course, things like this cross the wires:

“Honda Announces World’s First Mass-Production REE Recycling Process.”

So then we hear this:

“Canada has 1.1 billion pounds of rare earths locked in black shale deposits (the Alberta Black Shale Project) worth an estimated $206 billion. In addition, several other Canadian mines across the country show great potential,” said Perrin Beatty, president and CEO of the Canadian Chamber of Commerce.

$206 billion.

Okay. Clearly, someone has a Texas Instruments calculator, one with the zero still working….

Let’s not put too fine a point on the issue, but the companies operating in Canada are living in one of those cheesy reality TV shows, something like Race to Ytterbium or Finding Neodymium.

There appears to be a disconnect between the likes of the Canadian Chamber of Commerce and rare earth companies looking at narrow windows of opportunity, in terms of financing, economically-sound off-take agreements and straight-forward timelines when it comes to permits, compliance, construction, drilling and shipping off the concentrate it’s able to glean from the ground.

The latter issue there being dependent, of course, on ability or inability when it comes to efficient metallurgy.

Something will have to give.

Soon.

While some think Canada has a competitive advantage, there’s an argument out there that the competitive world is tumbling down all around what remains of a nascent industry in danger of being surpassed by countries that want it more.

Happy Chamber of Commerce reports are one thing. Government incentives and outright interest (think Quebec and its wonderfully ambitious albeit long-term Nord plan) are instrumental to success.

Without it?

Company boards, CEOs, shareholders should embrace what’s needed in a sector awash with trashed valuations: mergers and hard decisions about which projects should remain standing on a global stage.

Otherwise, stand back and applaud the efforts of countries like Vietnam and Kazakhstan.