The Global Race for Rare Earths

"I don't think the average person realizes how deeply rare earths have seeped into the fabric of daily life. They're all around us. "

"Biden is making a big push to set up some alternative suppliers. Nothing's happening anytime soon, but I think within five years or so we could see the beginnings of tangible alternatives."

"Having that mine production [in California] in the U.S. is a great first step because it helps solve the chicken and the egg issue."

Ryan Castilloux, analyst, Adamas Intelligence research firm, Ontario

Rare earth ore from a mine in California. The metals are difficult to refine and costly to extract. Photograph: Steve Marcus/Reuters

"Who would invest in a rare earth mine with no access to a downstream facility [for processing] to create value-added rare earth products?"

"Who would invest in a value-added manufacturing facility when there is no upstream mine to source from?"

Pierre Gratton, chief executive, Mining Association of Canada

"The world is undergoing an economic transformation, with innovative technologies, clean technologies, driving the pace of change."

"This is not going to be easy. But there's growing confidence that it can be done."

"The risk of not doing it is that there also goes the technology -- the high-tech jobs and high-tech schools and programs."

Ian London, executive director, Canadian Critical Minerals and Materials Reliance

Soil containing rare earth elements at a port in Lianyungang. China is by far the world’s largest producer of the minerals. Photograph: China Stringer Network/Reuters

 

The world, in a very real sense, is in competition with China to access and preserve a fair share of rare earths minerals, critical to modern technology. Rare earths elements represents a group of 17 materials that are becoming increasingly vital to modern technology in their use in electric vehicles, solar panels, wind turbines, military defence programs (missile guidance systems), headphones, motors and a wide range of other advanced technologies. The world is awakening to their critical function to the economy and security of the future.

Adamas Intelligence forecasts global demand for rare earths is set to increase at an annual growth rate of 7 percent until 2030. Rare earths are used for a type of magnet accounting for 90 percent of the elements' value, predicted to grow at ten percent through 2030, from 62,000 tonnes at present to 148,000 tonnes annually by 2030. Increasing demand for electric vehicle traction motors and other e-mobility applications such as electric bicycles, scooters and mopeds represent 77 percent of that growth.

A wheel loader operator fills a truck with ore at the MP Materials rare earth mine in Mountain Pass, California, January 30, 2020.   Steve Marcus | Reuters

 

Rare earths magnets are so critical to electric vehicles, according to analysts due to the fact that they represent a lighter weight alternative to conventional motors, promising to extend a vehicle's range for electric vehicles. Neither the United States nor Canada has established a supply chain of rare earths, even while China controls 70 percent of rare earths supply. A shaky situation given that China controls 90 percent of complex processing needed to transform rare earths into magnets and powders as end products.

'Rare' they may be identified as, but North America has great potential in rare earths where Canada has an estimated 830,000 tonnes of rare earths reserves, and nearly every province has seen identification with potential deposits that could be mined. Canada and the U.S. finalized a joint action plan on critical minerals in 2020, including rare earths, requiring increased cooperation on developing supply chains, research and development, along with support for the industry.

 

REE Periodic Table: The Rare Earth Elements are the 15 lanthanide series elements, plus yttrium. Scandium is found in most rare earth element deposits and is sometimes classified as a rare earth element. Image by Geology.com.

 

And it is a complex industry in total, requiring in-depth processing to begin with by taking rare earths out of the ground, separating, refining and placing them into products.  First, the ore must be extracted from the ground, then the rare earths are to e separated from other elements, a complex process requiring manipulating radioactive material. Following that, the rare earths must be separated from each other, and finally the processing of individual rare earths into oxides to be further processed into powders.

Uses of rare earth elements: This chart shows the use of rare earth elements in the United States during 2020. Many vehicles use rare earth catalysts in their exhaust systems for air pollution control. A large number of alloys are made more durable by the addition of rare earth metals. Glass, granite, marble, and gemstones are often polished with cerium oxide powder. Many motors and generators contain magnets made with rare earth elements. Phosphors used in digital displays, monitors, and televisions are created with rare earth oxides. Most computer, cell phone, and electric vehicle batteries are made with rare earth metals.

 

Finishing stages where the intermediate products are then converted into magnets or motors and inserted into products, complete the long and complex transitions. One of the largest rare earths mines in the world is in operation in California close to the border with Nevada, and it has been supplying its ores to China. A situation soon to change as a processing facility is being built in the United States. In the Northwest Territories, some 100 kilometres east of Yellowknife Cheetah Resources Corp an Indigenous enterprise, plans to mine small portions of rare earths from its Nechalacho project.

The ensuing product is envisioned as travelling by barge to Hay River and from there to Saskatchewan, then heading to Norway for further processing. The biggest rare earths company, Neo Performance Materials Inc. has no operations in Canada, doesn't mine, but is headquartered in Toronto, with a growing business enterprise geared to producing magnets with facilities in Estonia, Thailand and China.

China was able to create millions of jobs while increasing its capacity to manufacture various products, from refrigerators o washing machines, all occurring through its gaining of control of the rare earth supply chain. The country dominates the market in producing all manner of goods in its long grasp for production primacy, the globe its trading partner.

Stockpiles of rare earth ore at the Mount Weld mine in Western Australia. Photograph: Lynas Corporation/AFP/Getty Images

Research, Innovation, Discovery, Production, Distribution

"Enhanced Big Pharma reputations may well be the result. In its search for COVID profits, Pfizer last March issued $1.25 billion in 'sustainability bonds' under the United Nations' Sustainable Development Goals. The money raised, said Pfizer, will be used to fund capital investments in the manufacturing and development of medicines and vaccines, including the COVID vaccines."

"By issuing the bonds and taking a lead role on the vaccine search, Pfizer may in fact be seizing an opportunity to improve its image. Sustainalytics, which ranks corporations according to their perceived ability to live up to dubious environmental, social and governance objectives, currently ranks Pfizer as a 'high-risk' operation."

"At the end of the day, however, the arrival of effective vaccines will in fact mark another triumph in the role of profit-maximizing corporations in bringing good to society. The story will be how Big Pharma rescued global governments from the COVID-19 pandemic -- and at a fraction of the cost of what governments have expended on the project."

Terence Corcoran, journalist, Financial Post 

The laboratory at the University of Toronto where insulin was discovered.  University of Toronto

When insulin was discovered in a University of Toronto laboratory headed by J.J.R. Mcleod in 1921, its discoverers, Frederick Banting and Charles Best with the help of lab assistant James Collip, aspired to save lives lost to a dread disease, where children diagnosed with [juvenile-onset insulin-dependent] diabetes -- now known as Type 1 -- were as good as given an imminent death sentence, when their pancreas was no longer able to produce insulin to convey glucose to cells to be converted into energy. 

It was Frederick Banting whose idea formulated the production of insulin to save millions of lives around the world. And he had no interest whatever in profiting from his invention. He 'sold' the patent to the University of Toronto for the princely sum of one dollar. He felt the discovery should have no price tag connected with it, that it was the property of science and the world community, not his own. Thereafter insulin was mass-produced and widely available for the treatment of diabetes everywhere in the world. That was then, this is now.

 

Pfizer identifies lead coronavirus candidate ... WSJ

 

Laboratories of today bear no physical resemblance in their state-of-the-art equipment and scientific upgrades in fast-evolving techniques. And though there will always be laboratories and discoveries in university settings, the manufacture of pharmaceuticals is the work of large production facilities, the private property of big business popularly named as Big Pharma, and not with affection. They are driven, like any other business, to expand their profit margin.

And claim that much of their profit is plowed right back into new discoveries -- apart from what shareholders are guaranteed. That without charging hefty prices for their biological/chemical formulations -- developed in their laboratories by their own scientists and subsequently patented to ensure their research would profit their own business until patents ran out -- the wherewithal to continue important research into the many chronic illnesses and diseases that bedevil humanity. Research is costly, trials are time-consuming and also costly.

Government safety and efficacy regulations are a concern and products must be approved and only then will the production line proceed and distribution begin, to service the needs of the public requiring medication for a wide range of conditions. But because pharmaceutical companies make huge profits and their earnings burden health systems, the public, led by health services and government agencies view the producers as scalpers, unjustified in the prices they set in a capitalist free enterprise system.

Photograph: Dado Ruvić/Reuters

So we mentally sneer and refer to them contemptuously as conscienceless "Big Pharma" out to get the biggest bang for their research prowess. They're sinister in the sense that they're driven by Filthy Lucre, but their research, development and production are critical to our general well-being, battling the scourge of human illness and disease, goes the grudging admission. We don't regard manufacturers of far less vital products charging hefty fees in the same way, however.

There are governments, such as Canada's that castigate Big Pharma for their operations and pricing, placing pressure on the pharmaceutical companies for pricing concessions tied to bulk purchasing in the case of national health care schemes. Which leaves the pharmaceutical companies that sell to Canada no incentive to also produce in Canada. Canada's forced low prices present a conundrum whereby Americans try to purchase their drugs from Canada though the drugs are produced in the U.S. where they sell at competitive prices.

So Canada has no production capacity. And at a time of critical access to developing vaccines to combat a sometimes-deadly and frequently-devastating coronavirus Canada has left itself in the lurch. Those countries which enable the production of drugs without pressing the producers for lower pricing will have expedited access to vital vaccines. Canada will have to wait before its population is able to be inoculated, a considerable length of time after other nations' populations have been serviced. 

Since those in the health and pharmaceutical fields have been sounding the alarm to Canadian governments over its pricing and regulatory regimes undermining pharmaceutical capacity in the country for years, and government has taken little heed, this is one of the dire consequences. "Innovative new medicines" entry to Canada will lag and sometimes not be available at all should producers fail to launch their products in a country that haggles firmly over pricing.

 

Banting and Best were satisfied with a Nobel prize.

F. G. Banting and C. H. Best with a Marjorie on the roof of the U.of T. Medical Building

At Your Own Risk, Chinese e-Cigarettes

"Once the national standard comes out, I can follow its targets and make big investments."
"I won't have to worry that something will happen, but now I don't know which day the sword would fall."
Ou Junbian, owner, Sigelei, e-cigarette exporter

"We can guarantee that they [cannabis e-cigarettes] are safe to be consumed through the stomachs, but is it safe enough to be absorbed through the lungs?"
"To be honest, in this respect, neither we nor the industry has evidence that is particularly solid."
Jiang Xingtao, director of flavors, RELX, e-cigarette seller

Reuters

China, in response to a vaping boom among young Chinese, is preparing to mandate compliance by producers of e-cigarettes to standardizing ingredients and manufacturing. With the establishment of a "national standard", producing companies are expected by law to provide details on the number and dosage of ingredients, to place warnings on packages and to devise methods of testing e-cigarettes, ensuring compliance.

Up to the present, the government of China has permitted the industry free rein, enabling them to thrive, no supervision by any government agency to ensure quality and safety. The vast country has over 9,500 e-cigarette production companies many with haphazard quality controls, resulting in knockoffs, unsafe ingredients and leakage of vape liquid. Vaping oils with nicotine levels higher than the package states were produced by eight of those companies.

Obedience to the new guidelines will have the effect of production costs increasing, a circumstance likely to result in hundreds of small e-cigarette exporters going out of business. The new standards when brought into law will have an opposite effect for most manufacturers since clear guidelines will ensure that manufacturing companies who comply may then legally sell their product in the vast Chinese market.

This is an industry that has viewed China as a haven, where ninety percent of the world's e=cigarettes are made. High-profile venture capital funding has invested hundreds of millions in some of the nation's top e-cigarette brands such as RELX, FLOW and Yooz. Chinese e-cigarette exporters have seen their sales drop precipitously to the United States in the wake of vaping-related health crises where thousands of American users have become seriously ill, and 47 have died.

Coincidentally, the domestic market which began to open up three years earlier appears to have taken up the slack, with an increasing interest in vaping in China. An estimated ten million Chinese e-users has turned Beijing's attention to the popular pastime, mostly young people among whom it is appealing to vape sleek devices with flavours such as chilled strawberry and orange soda.

China's e=cigarette market alone was valued at $750.4 million in 2018, according to global market research consultancy, Euromonitor, almost triple the 2014 valuation. Of a population of close to 1.4 billion people, there are over 300 million smokers. Vaping among the young has raised public concern, urging that regulations be drawn up and put into law and into practise to ensure public health safety in vaping.

It was revealed in early November on the website of People's Daily, the Communist Party's official news organ, that most e-cigarette companies went on selling their products online in defiance of the ban. China Central Television, the state broadcaster, filmed Beijing authorities calling on e-cigarette companies to comply with the ban and a day later Alibaba's Taobao and JD.com., two of the nation's most popular e-commerce platforms, no longer listed their availability.

Not the Most Ideal of Renters

"These are people [renters of her property] I'd be friends with. They dressed well, they presented themselves well, they have an online company -- what's where they told me they make their income. The website looks legit."
"[They -- Alberta Health Services -- said] my property had been condemned, and did I know about this incident that occurred on the weekend."
"I kind of thought someone was pulling a prank on me. And then he went into the details and I was absolutely shocked."
Jennifer Schwitzer, rental property owner, Edmonton, Alberta

Health authorities deemed this house in southwest Edmonton uninhabitable last month after an ambulance call led authorities to a suspected fentanyl lab in the basement. Owner Jennifer Schwitzer paid more than $10,000 to have the interior cleaned. POSTMEDIA NETWORK

"I think the myth is that people in the downtown core are the ones who are 'causing' the problem."
"[But] the people downtown don't have the money to put together a lab, for example. That's a very suburban thing ... the inner city tends to be much more the victims, if you will."
Marliss Taylor, director, harm reduction program Streetworks

Two well-dressed 25-year-olds, prospective renters of a new house in a new housing development in the suburbs of Edmonton, claiming to have just returned from a prolonged holiday in Puerto Vallarta, Mexico, looking for a house to rent. The house owner, with 16 years of experience in renting property took an instant like to the couple. They made application in late August for the house rental, to move in on the first of September. The house owner, Ms. Schwitzer, ran the usual background checks.

Their references checked out well, and she made the decision that they would be ideal renters. What could go wrong? It took a month after that decision to find out exactly what could go wrong. Mind, what happened to Jennifer Schwitzer is also happening to other property owners across Edmonton where police have conducted raids on fentanyl labs. Investigators publicized the issue, to make it public knowledge that in one neighbourhood $1-million worth of drugs, including heroin look-alike fentanyl was seized.

At yet another private house that was rented out and contained yet another lab, Edmonton police on a raid at the large house outside St.Albert, discovered the largest fentanyl pill cache in Canadian history so consequently the larges seizure took place accordingly. And according to Mike Wiebe, of haz-mat cleanup company Rapid Response Industrial Group, it is in newer neighbourhoods with unfinished basements that his company mostly cleans up fentanyl contamination.

 But Ms. Schwitzer was aware of none of this when she decided to rent to the two normal-in-appearance and evidently well-adjusted couple who expressed interest in her rental  house. And now she is aware that though statistics indicate deadly overdoses to be concentrated in the city's core, it is in the suburbs where those who produce the drugs construct laboratories for their thriving businesses. In those rental houses production and processing takes place, in the city's suburbs.

It seems that an ambulance was called by someone at the rented house on October 6 when the male renter overdosed. Obviously taking too much of his own medicine. He failed to recover from that fatal overdose. His fiance was in the house at the time, along with another person unknown to Ms. Schwitzer. Which was when she discovered that the house she had rented out to the nice couple was the shell where they existed to produce illegal drugs.

It cannot have been very comfortable, the only furniture was a bed, a couch and some chairs, a game system, computers and a few dishes in a kitchen cupboard. The paramedics of course reported what they had found and the police entered the scene. And they called on the health authorities who declared the house uninhabitable. And all it took was a month for the house to become contaminated with drug residue to produce that unsafe environment.

Cleanup crews work at a house in southwest Edmonton that health authorities deemed uninhabitable due to a fentanyl lab in the basement. The owner said she rented the house to a pair of new tenants in September. By early October, one of them had overdosed and died. Edmonton Journal

Inspection of the house revealed that there was drug residue in the basement, the air circulation system, kitchen cabinets and upstairs bathrooms. Alberta Health Services advised Ms. Schwitzer she would be required to hire a remediation company to clean up her property before it could be declared habitable again. That cleanup cost her $10,200. Crews clad in special haz-mat suits sprayed a solution to break down fentanyl on house surfaces.

The carpeting and basement wall panels required replacing. The furnace had to be cleaned. And she was required to attend court in an effort to evict the remaining tenant. Opioids have been linked to 477 accidental deaths in the city of Edmonton since January of 2016. And yes, the highest concentration of overdoses take place in the city core.

Preparing for the Consumer Pot-Acquisition Onslaught

"[The study's purpose is to provide a] comprehensive outline of the scope and scale of cannabis consumption in Canada."
"Actual demand remains unknown and there is no statistically proven method to know demand with statistical certainty."
Health Canada-commissioned report on cannabis consumption in Canada 

"[There will be a] huge curiosity spoke [of those waiting to buy legal cannabis in the early days of legalization across Canada]."
"I don't think there will be empty shelves, but there might be shortages of some strains."
Brad Rogers, president Canntrust cannabis growers

Concerns are being raised over the ability of Canada's licensed medical marijuana producers to supply enough cannabis for a legal recreational market. (Julie Gordon/Reuters)

An air of expectancy is palpable among recreational drug users in Canada. The country is set to become the first to legalize recreational marijuana right across the country, by an act of Parliament. Cannabis growers have been revving up activities with frenzied determination. Investment in infrastructure for marijuana production has been driven on overtime. Advertising and public relations campaigns have been very visible over the past year. Suddenly, cannabis, a herb whose growth, production, sale, acquisition has been illegal save for prescribed medical services, is set to become readily available to consumers.

Cannabis-growth operators are confident they are able to spin the demand into amply-provided products to satisfy the drive by consumers to have their fix and smoke it too. And then, the stunning
news out of a report commissioned by Health Canada predicting that demand will outstrip supply in the first year of legalization. This, at a time when producers have been slavering to get their product to market, ramping up production with the happy visions of dollar signs twinkling in their bedazzled eyes.

With the use of a 2017 federal survey on cannabis use to enable the study's estimation of the numbers of Canadians and their appetite for readily-acquired, legal weed will be in the initial year of legalization, the calculation of 926,000 kilograms was arrived at inclusive of recreational and medical cannabis use; 41 percent higher than the Parliamentary Budget Officer's estimate in 2016 of 655,000 kilograms. The outlook, should the new number accurately reflect demand, augurs shortages from October 17 forward.

To industry experts this will not come as shocking new news, since they have predicted Canadian cannabis growers would be unable to produce sufficient product from the outcome, until the situation stabilizes and producers prove themselves equal to the difficult task of putting their production skills to the test, enabling them to satisfy demand and in the process build their singularly successful pot-production empires.

"We all know there is not going to be enough product on Day One, not nearly enough", pronounced Greg McLeish, a financial analyst who specializes in cannabis, with Mackie Research Capital Corp. His prediction is that it won't be until 2020 that supply will finally match demand. Even now, provinces preparing for an unprecedented demand in reflection of a product that was illegal until October 17, have updated their orders from 10,000 kilograms to 17,000 kilograms.

The issue, of course, is to be able to adequately stock legal stores and at the same time determine anticipated tax revenue collected from cannabis sales. Spinoffs such as job creation, and regulatory services to come out of the entire experience all require attention, from licensing to public education and policing related to matters such as driving infractions. If it all seems somewhat 'on the fly', that's because it is, despite the long window of preparation, given the many ponderables involved.

The study, commissioned by Health Canada had a price tag of $90,000 reflecting the combined research of Marijuana Policy Group located in Denver, and BOTEC Analysis research firm also in the U.S.There is uncertainty over how many pot users will simply continue supplying themselves from familiar illicit sources, from known dealers, dispensaries and friends. The anticipated shift to the legal market will rely upon competitive pricing and convenience, the variety of products and whether illegal dispensaries will successfully be shuttered by the law.

According to an estimate from a CIBC World Markets report, cannabis growers currently produce roughly 350,000 kilograms annually even while the large grow operations are expanding at a frantic pace and new companies vie for licences. Billions in investments are announced along with plans by ambitious companies to become leaders in the field. "Construction and production promises in this industry are a dime a dozen", the report by CIBC published in May, noted.