Remember Russia? Notice the REE silence?

Why hasn’t Russia played a more front-row role in the global positioning over rare earth supplies? That remains one of the most intriguing questions of the moment, especially in light of the political considerations involved. Several months ago I reported here on regarding a number of projects in Russia that could be advanced (this is reprinted at the bottom of this posting for those who may not have seen it). But that’s the problem with news: something new is happening all the time, and our attention has been captured by North Korea making REE noises, along with blue-sky proposals to dredge them off the ocean floor or throw rose petals in front of the Taliban to gain access to the REE riches of Afghanistan.

But it is important that we don’t just consign Russia to the backburner because the story there is just becoming more intriguing. This week The Financial Times argued that Russia and Vladimir Putin were locked in a Soviet era time warp and that the country was in decline; I would suggest that some of the new inequalities recall the last years of Tsarist rule as well. But Putin has used natural gas for political ends, and there are geopolitical aspects to the oil it produces. No one knows quite what is happening with palladium supplies because the Russians haven’t disclosed if they’re going to ship any more from their stockpiles to be sold in Zurich.

So, given that Russia has REE capability (and we know that some corporates there are following the rare earth story), why is Moscow not pushing REE as a tactical play? They’ve seen what China has managed to achieve strategically. Winston Churchill famously said in 1939 that Russia “is a riddle, wrapped in a mystery, inside an enigma” and then added that he believed the key to be Russian self-interest. But we don’t see signs of that last mentioned factor; perhaps something is stirring but so far not surfaced.

Why bring this up now? For one thing, as already stated, Russia has REE and surely realizes the strategic implications of producing them. But, secondly, Putin is planning to have a quasi-recreation of parts of the old Soviet Union; he wants to build a Eurasian economic union with Belarus and Kazakhstan. (He would no doubt like also to re-establish Moscow’s control over Ukraine and the Central Asian republics, but he is clever enough not to try too much at once, but there is talk that Kyrgyzstan – which has REE deposits and in the 1970s was the main source within the USSR for rare earths – and Tajikistan could also join the union.)

Back in February, London’s The Daily Telegraph published an article written by Ivan Rubanov of Expert magazine which argued that China’s restricting REE exports might prove an opportunity for Russia. He said that rare earths produced in Russia were mainly extracted as a by-product of mining other metals. He said Russia had 30 per cent of the world’s known REE resource.

This comes as Dow Jones Newswires reports that Kazakhstan plans to produce a first batch of 1,500 tonnes of REE next year as it enters the race to compensate for the shortfall of Chinese exports. The bulk concentrate of 15 REE will come from a joint venture called Summit Atom Rare Earth Company that was established last year with Japan/s Sumitomo Corp. (SSUMY), said Sergey Dara, director of strategic development at Kazatomprom, the state nuclear company that also oversees rare earths and rare metals. Separately, Kazatomprom and Toshiba Corp. “will shortly establish another joint venture called KT Rare Metals Company to produce rare metals. There has also been a Reuters report that French research companies will help Kazakhstan develop its deposits of rare earth metals, quoting the state uranium miner Kazatomprom.

This has resonance if the Eurasian idea gets traction.

Basically, I am just trying to keep this Russian story in front of readers. Something is bound to develop in the Russian REE space and we should be ready to place it into context.

The point of this posting is not what is happening, but rather why is nothing (apparently) happening?

Anyway, for those who have begun reading this blog only recently, back in June I outlined five projects in Russia details of which had come into my possession. This is what we reported then:

“The most extraordinary is near the city if Yekaterinburg in the Urals. There is warehouse full of monazite concentrate. It would be available to process the concentrate to produce REE; the information is that it would be possible to create a highly profitable enterprise producing 2,500 tonnes a year of total rare earth oxide. The concentrate was stored from 1956 in wooden boxes placed in metallic sheds, the total quantity being 82,653 tonnes. Concentrate is represented in several lots differing in chemical content, but the boxes average 54 per cent rare earth oxides, 22.2 per cent phosphate, 7.8 per cent thorium, along with uranium, zirconium and titanium dioxide, plus oxides of iron, aluminium, silicon, calcium and magnesium. The Russians have studied four possible sites for processing the concentrate. These could between them produce lanthanum carbonate and oxides, cerium, neodymium, praseodymium, samarium, terbium, dysprosium, europium, erbium, gadolinium and yttrium. Production at one plant in the Sverdlovsk region will include manufacturing magnets. It is expected that production of magnets containing REE will be possible from 2016.

“The other projects are potential mining operations.

“There is Tomtor in Yakutia, well inside the Arctic Circle and with only three months a year not covered in snow. The temperature range over the year is from 13C in the summer to -50C in winter. The resource of 150 million tonnes of REE is spread over three main deposits. The Russian documents show that it could be mined by open pits down to a depth of 70 metres with operations taking place between October and April. Production would be possible from 2015 with annual output of 11,000 tonnes of total rare earth oxides, 9,000 tonnes a year of niobium oxide and 4,000 tonnes of titanium dioxide. The transport options are northwards by road to a seaport or south by road to the railway at Lena.

“Near the northern city of Murmansk (180km by highway) there is the Lovozerskoe deposit, part of a group of mining and processing facilities geared to produce rare earth metals as well as niobium, tantalum, titanium and magnesium. Potential produce of REE is 3,600 tonnes a year. This area was discovered in the 1920s and magnesium production began in the 1930s. Rare earth “raw materials” production began in 1971.

“Then we have two projects near the important Siberian city of Irkutsk. The Katuginskoe deposit, northeast of Irkutsk, is expected to produce REE, niobium, tantalum and zirconium. Temperatures range from over 30C in the summer to about -60C in winter. Infrastructure is being developed to serve the nearby Udokan copper project and 45km away there is a coal deposit. Preliminary assessments are that annual production could amount to 5,000 tonnes a year of total rare earth oxides, 4,000 tonnes a year of niobium, 300 tonnes of tantalum and 33,000 tonnes of zirconium. Northwest of the city is the Chuktukonskoe deposit with, the Russians believe, the capacity to produce 9,000 tonnes a year of total rare earth oxides, 1,000 tonnes of niobium, and 18,000 tonnes of magnesium. Just 110km away a hydro power plant is under construction.”

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