Weekly Review: lanthanum catalysts, Lynas update, REE clays in Australia – and a Baotou bombshell

The past week was exhilarating or troubling depending who and where you were. Plenty of doubts: the future of lanthanum in catalysts, Lynas’ ongoing Malaysian saga, for starters. Questions: just how much did Baotou mine? And positive with explorers pressing on with all speed and one player hoping they’ve stumbled on to something resembling China’s ionic clays.

And then, as a Good Friday bombshell, China announces it has allocated a 25,000 tonne production quota to Baotou. If this – despite Reuters’ vague reportage – is actually an export licence then that is indeed big news. Not to mention confirmation that Beijing is intent of ending up with just three or four big REE companies.

But back to the week just past.

First, there was a report out of the London-based oil refining and petrochemical monitor, Global Technology Forum, which concerns the use of rare earths in fluid cracking catalysts (FCC). It quotes speciality chemical company W. R Grace and Co (NYSE:GRA) as saying there was an aggressive shift towards lower REE formulations in FCC products when the price of lanthanum hit the $US15/lb to $US20/lb range last year. A spokesman said “over the course of last year, we saw a very rapid changeover of catalyst products from higher rare earths grades to lower or zero rare earth grades”. The company claims its Z-22 catalyst is capable of matching the activity and selectivity of rare earth-based catalysts, while Grace’s Remedy catalyst system requires the same rate of catalyst additions as a high REE catalyst.

Another executive of a specialty chemical company, Albemarle Corporation (NYSE:ALB), was quoted saying “until major new supplies come on to the market with proven capability, I see additional interest in low rare earth catalysts. I think there has been some permanent demand destruction for lanthanum in FCC catalysts due to the unprecedented price spike and, more importantly, concerns about availability”.

This goes to the point that Dudley Kingsnorth has been making for some time: the REE industry has to get its act together and ensure that end-users can rely on sources outside China. Only then will you get users committing to REE-based technologies. Fortunately, the impact of Mountain Pass and Mt Weld should ensure that continuity and reliability of supplies; and, as subsequent projects (especially HREE ones) come on line, the situation will improve.

But, speaking of Mt Weld, we now – as reported yesterday on RareMetalBlog – have the news that Malaysia’s Atomic Energy Licensing Board (AELB) has postponed granting a temporary rare earths mine operating licence to Australian miner Lynas Corp (ASX: LYC) until the hearing of an appeal by residents to the government has been settled.

Just hours before this latest development, Foster Stockbroking in Sydney put out a note being positive about Lynas Corp announcing its construction works at its Lynas Advanced Materials Plat (‘LAMP’) in Malaysia was 97% complete and will be ready to come online in three weeks. However, they added, the only obstacle to commencing production was the issuance of the Temporary Operating Licence (‘TOL’) by theAELB. The TOL has been approved, however has not been issued despite Lynas highlighting that all conditions stipulated have been fulfilled.

Foster said: “The key issue seems to be surrounding the creation of a permanent waste disposal site. Lynas have developed the technology and processing to turn the waste from the LAMP into saleable products namely; fertilizers, plaster boards and other base materials for road construction. We anticipate a meeting between Lynas, government officials and AELB will be held shortly to resolve this issue and view a favourable outcome should be reached given that waste material from LAMP will be used to create by products and should alleviate the AELB’s concerns regarding waste disposal management.”

As this was being written, Reuters reported on Good Friday that “China has issued a rare earths production quota to Inner Mongolia, the local resources ministry said in a statement on Thursday. The quota, for production of 25,000 tonnes, has been allocated entirely to Baotou Steel Group, according to a statement by the local branch of China’s Ministry of Land Resources.”

We await further details. We’ll be watching the Chinese press to see if they elaborate on this permit. If so, we’ll post an update on RareMetalBlog.

Just recently, of course, Baotou’s subsidiary Inner Mongolia Baotou Steel Rare Earth Hi-Tech Co, announced its net profit jumped 363.33 percent year-on-year to 3.48 billion yuan ($553.54 million) in 2011.

But that announcement, like the one today, begs as many questions as it answers. We don’t know the costs and revenue per kilogram of rare earth oxides, nor the tonnages and sales volumes.

There’s an interesting presentation out from TUC Resources (ASX:TUC) – it does not seem to have been posted on its website yet, but go to the Australian Securities Exchange (www. asx.com.au), type in company code TUC and open the most recent announcement.

The presentation says the company believes it has a structure similar to the southern Chinese clays, with clay overlying xenotime. It’s early days yet but a confirmation of that, along with good grades, would be very big news.

TUC’s Stromberg project is 85 per cent HREE. A pie-chart shows yttrium accounting for almost three quarters of the mix. Recent drill holes have returned yttrium as comprising between 59% and 71% of total rare earths, with dysprosium between 7% and 7.5%. Also figuring well are erbium, ytterbium and gadolinium.