The Anchor House, Inc.

By Clint Cox

It’s late at night and you’re sitting in front of your computer wondering what you can do to expand your brain.  Go to the US Patent Office and look up really cool inventions! Search by keyword. A friend of mine got me started on this.  Of course, I chose keywords related to rare earth and found some pretty cool stuff:

Super Shiny Stripes on the Street

Marvelous Microspheres! Rare earths are really coming to light — and reflecting it back to you! Courtesy of 3M, we have reflective pavement marking from Patent #5,853,851:

Another desirable component of the glass compositions of the present invention is a rare-earth metal oxide, such as La.sub.2 O.sub.3. Lanthanum oxide (La.sub.2 O.sub.3), for example, promotes glass formation, aids in melting, and helps raise the refractive index while not deleteriously affecting the acid resistance or crush strength.

Tiny lanthanum microspheres — coming to brighten a street near you?

Goodbye Kidney Stones?

I have heard that kidney stones are excruciatingly painful.  I am a big fan of relieving pain, so I bring you Patent #7,192,609:

This invention relates to a method of preventing or treating urolithiasis (kidney stone disease) by administering rare earth salts, e.g., Lanthanum salts, to bind dietary oxalate and preventing its absorption into the gastrointestinal tract.

Rare earths are known to have a variety of medical uses, but this is the first time I had seen a description of this patent.

Go-go Golf Balls

The merits of neodymium for use in magnets is well known, but who knew that we could smack the neo down the fairway? The Callaway Golf Company is employing the merits of rare earths in Patent #6,739,985:

Golf ball cores formed from blends of neodymium and cobalt synthesized high molecular weight butadiene rubber

I am under no illusions that rare earths will provide the solution to my hideous golf game, but I am glad to know that golfers may be getting better with a little help from neodymium!

By Clint Cox

It’s a draft.

I feel the need to say this because there are a lot of people saying that the Chinese will prohibit export of certain HREEs as if it is a certainty — but it is not a certainty at all.  From the recent press release (from www.chinamining.org) regarding the the Development Plan:

China’s Ministry of Industry and Information Technology (MIIT) has drafted a plan and related policies for development of the rare earth industry in 2009-2015 and is now soliciting opinions from the related authorities, said Miao Wei, vice minister of MIIT.

Here’s the key — it is a process.  Note the part where it reads, “…is now soliciting opinions from the related authorities”.  This is not the final policy.  Let us wait and see the final policy before drawing conclusions.

By Clint Cox

China is the undisputed champion of the rare earth market, but it isn’t sitting on its laurels! Instead, it is steadily trying to streamline and remake its industry from within.

Two stories out of China last week indicated that China is in the midst of an industry-wide reorganization. The first story is from Chinamining.org and is entitled “China has drafted development plan for rare earth industry in 2009-2015, official”.

A quote:

China’s Ministry of Industry and Information Technology (MIIT) has drafted a plan and related policies for development of the rare earth industry in 2009-2015 and is now soliciting opinions from the related authorities, said Miao Wei, vice minister of MIIT.

Mining rights for large rare earth mines will be transferred to strong enterprises via tender in the future, Miao added.

Two things are clear from this. First, this is a process. Opinions must be solicited, and much must be sorted out. Second, a few big players within China will win. The mom-and-pop operations will be pushed out of the market in favor of fewer consolidated players. In fact, a later article entitled “China to support three domestic enterprises for rare earth development” published on steelguru.com narrows this list to three.

The quote:

The three enterprises are Inner Mongolia Baotou Steel Rare-earth Hi tech Co, China Minmetals Corporation and Jiangxi Copper Corporation. However the stockpiling policy for rare earth products can hardly be formulated.

The hope may be that the consolidation will allow for streamlined operations and greater control during the ebb and flow of the market.

We will follow the story as more details are released.

By Clint Cox

How well do we truly understand risk in the rare earth market? Most people who invest in the mining sector understand that there are risks inherent with mining operations.  These risks include (but are not limited to):

•    country—will that dictator really allow you to take all those diamonds out of his country?
•    pricing—will rhodium be $10,000 or $500 when that mine gets to production?
•    environmental—will the mess the last company left be the new company’s responsibility?
•    management—is the management really hoping to find gold bricks while sitting on the beach in Tahiti?

Mining is extremely risky, and for junior exploration companies to find “the next big one” is like looking for a sweetpea painted silver in a ball bearing shop.  As risky as mining is, in general, I would like to argue that the Rare Earth sector has its own special set of risks.

The risks are not confined to this list, but these provide a starting point:

1.    Competition. The Chinese are blessed with great resources and focus. The market tends to look at the junior exploration companies listed in Australia and Canada as the great hope for REEs outside of China. But don’t forget the big players that aren’t junior exploration companies.  There are private companies and interested parties from the top to the bottom of the supply chain. For example, recent press releases have shown that the Japanese (such as Toyota, Mitsubishi, JOGMEC and others) are looking for resources. These are players that intimately understand the market and its future requirements.

2.    The Numbers. Rare earths are quantified in a variety of ways: %REO, ppm, element distribution, % Heavies versus Lights, % recoveries, $ of rock in the ground, etc.  Some of these numbers are important, and some mislead. Some of the most important numbers are rarely available to investors! It is difficult to understand the absolute truth about what the numbers tell us. Just when I think I comprehend an answer – another snafu appears. Don’t be complacent with the numbers. Know that you know that you know.

3.    Experts. There are a lot of new “experts” emerging in the rare earth industry! The number of qualified experts in this field is small. There are some great geologists out there – but just a very small handful that have the expertise to claim that they specialize in this. Be sure that the expert whom you are banking on has the proper credentials and context necessary to speak the truth about rare earths. Remember – assay results alone don’t make experts!

4.    Whiplash. The day the NdFeB magnet was revealed, the market was rocked dramatically. The South China ion adsorption clays stunned the geos who thought you had to have significant %REO. The United States used to dominate this market.  Buckle your 5-point harness and put on your helmet! This market can be reshaped so fast that the cutting edge becomes dull and obsolete almost overnight. (If I’m mixing my metaphors, it’s only because this market is so perplexing!) What we think about the realities of this complex market today will undoubtedly be transformed by tomorrow.

The picture of the week: Rare earth metals oxidizing for your viewing pleasure:

By Clint Cox

There are a LOT of companies coming out with rare earth assay results now.  REEs have become a hot topic, and many companies are now throwing their assay results into the ring — hoping to become the next contender in the rare earth sector.

Assay results are often what companies use to project their legitimacy in the marketplace, and therefore it is critical to understand what these tests are really telling us.  According to the US Bureau of Mines (as provided by EduMine here) “assay” is defined as following:

Definition: assay
To analyze the proportions of metals in an ore; to test an ore or mineral for composition, purity, weight, or other properties of commercial interest.

So what do assay results tell us?
1.    How much rare earth is in that particular sample. Usually expressed in parts per million (ppm), assay results show the composition of a given sample of ore (or potential ore).  This gives a sense, in general terms, of what elements are found in the sample.  It is often converted to a percentage as well. They often don’t test for all of the REEs or show “trace” for the amounts.

2.    The comparative percentage of one element to another. This can show if the rare earth content of the sample skews towards the light rare earths (LREEs) or the heavies (HREEs).  Also, certain values of elements other than the REEs can provide clues as to the environment in which the REEs are found.

What rare earths found within?

It is also important to know what assay results DO NOT tell us:
1.    What is the rare earth mineral (or minerals)? Sometimes it is assumed that you may have a particular mineral when you have a given set of assay results — I have made this assumption in the past myself. It is true that certain minerals may have a typical distribution of rare earths, but there may be other rare earth minerals involved.  A good example of this would be Thor Lake, which can have a number of rare earth-bearing minerals in a given sample. Other testing methods must be used to ensure that the rare earth minerals are properly identified. After all, it is critical to correctly identify the mineral that hosts the rare earths.

2.    Is the assayed sample representative? Beware of the infamous “grab sample”.  Many companies take special care to take samples only from what they believe to be the prospective ore body. However, it is often difficult to resist assaying the fantastic grab sample – perhaps that one sample found 40 meters up the cliff face that has that giant perfect crystal of bigdollarite!  Just make sure that the results that you are looking at come from samples that are taken from areas that are representative of the potential ore body.

3.    Metallurgy. You can receive fabulous assay results from complex mineralogy.  However, it may not ever be economic to get the REEs out the minerals. It takes lots of time, effort, and money to properly determine a process to create a saleable concentrate of rare earths.  Many companies are taking the proper steps to establish the processing needed to pull out the REEs, but beware of the assumption that the REEs can be easily pulled out of the ground.  If a company has $500 rock in the ground, but it takes you $2500 to pull out the rare earths – that project may not be feasible.