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Tom Kool

Tom Kool

Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations

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Huge Rare Earths Discovery is Gamechanger in Americas Trade War with China

Rare earths

At the height of the American war machine’s realization that China controls nearly all of its raw materials, two new developments in Europe now suggest that the West has a fighting chance to secure critical metals for the future: A major discovery in Norway, and a potentially game-changing acquisition in Greenland.

In mid-June, Norwegian mining company Rare Earths Norway unveiled one of the largest deposits of rare earth elements in Europe in the Fen Carbonatite Complex in the country’s south. That discovery followed a vote in Norwegian parliament that paved the way for offshore, deep-sea mining of rare minerals in the country’s remote northern waters, Fortune magazine reported, making this the first country in Europe to allow such seabed mining activities.

At the same time, Critical Metals Corp (NASDAQ:CRML) announced an acquisition deal for what it believes is the largest critical metals deposit in the world, in Greenland.

On June 10, Critical Metals Corp signed an agreement to acquire a controlling interest in Greenland’s Tanbreez project, which it says is the largest rare earth deposit in the world. Once operational, CRML expects it to supply Europe and North America. And on June 18 the company announced it had completed its initial investment for the Tanbreez acquisition, lending more confidence to the deal and further de-risking the transaction, according to a company press release.

Tanbreez is said to have over 28 million tonnes of total rare earth oxides, the company estimates internally, and nearly 30% of that is the most coveted “heavy” rare earth elements (HREE).

Given the success of MP Materials (NYSE:MP), a $2.2 billion market cap issuer that has a known resource of just under 3 million tonnes that is almost entirely light rare earth elements (LREE), CRML could be set for a significant valuation re-rate.

“Tanbreez is a game-changing rare earth mine for the West and a key step in positioning Critical Metals Corp as the leading supplier of critical minerals, CEO Tony Sage said in a press release.

Rare earths metals are used in our everyday electronics, but without them, there will be no clean energy transition, and the U.S. will find itself at a weapons disadvantage—a fearful thought at a time of geopolitical upheaval spreading across Europe and the Middle East.

With Russia and NATO constantly dipping their toes over their respective “red lines” on Ukraine, Russia making flanking movements in northern Africa and the Israel-Hamas conflict causing shifting global alliances and calculations, rare earths metals draw a line in the sand in the next global conflict.

That makes European discoveries all the more urgent, and Critical Metals is eyeing its potential to become one of the most important miners of the decade. And while heavy critical metals is golden goose in mining today, Critical Metals is also gearing up to develop the Wolfsberg Lithium Project in Austria, Europe’s first fully-permitted lithium mine.  

China Is Wielding the Ultimate Weapon, Tanbreez Could be Frontline Defense

The two-pronged trade war has been well under way for some time now, and it’s all about the nexus of microchips and rare earth’s elements (REEs).

In August 2022, the Biden administration signed the CHIPS and Science Act into law to boost domestic manufacturing of semiconductors and reduce reliance on China. That move was in response to Beijing’s move to tighten exports of rare earths elements gallium, germanium and graphite. In late 2023, Beijing tightened controls on exports of rare earths and then banned the export of rare earths extraction technology. The trade war pits semiconductors against REEs in actions and reactions by Beijing and Washington.

Everything going forward is about microchips. Artificial intelligence (AI), military defense, and absolutely everything in between. It’s all powered by chips, which do not exist without the REEs necessary to make them.

That’s why the Tanbreez acquisition is so significant. The mine is positioned to become a major REE supply chain for the western hemisphere in the face of a Chinese government that has the ability to severely disrupt the availability of nearly all critical metals.

The Chinese could almost instantly take 50% of rare earth oxide supply off the market, which would devastatingly affect U.S. defense systems, which are already stretched thin over Ukraine.

Tanbreez is a 4.7-billion-tonne Kakortokite outcropping ore body about which over 2,000 academic papers have been written. It contains economically attractive amounts of Zirconium, Tantalum, Niobium, Hafnium and REEs. Nearly 30% of the minerals, all of which are said to occur in significant size and quality, are the most valuable of heavy rare earths.

Source: Tanbreez.com

The project was awarded an exploitation license on August 13, 2020, and is now working on the final environmental permit before commencing mining operations in Greenland. Nearly 400,000 assays have already been taken from over 400 drill holes. And an SK-1300 is now underway on this 4.7-billion-tonne multi-element asset, which hosts 28.2 million tonnes of total rare earth oxides (TREO).

Tanbreez could unlock REE supply for the Western world.

And the Western world is growing desperate. The fear is that Beijing has all the leverage in this race. China has already halted exports of some REEs, and since China also processes its own REE raw materials, there is palpable fear that they could cut off the West entirely. That’s what makes this a game of chips and rare earths. 

In fact, it was this fear, aired very publicly, that reportedly prompted Donald Trump in 2019 to float the idea among his aides of buying Greenland, an autonomous Danish territory, outright. Now, it is in American hands, through the normal channels of corporate acquisitions.

Tanbreez could hold the key not only because of its sheer size and scale, but also because an estimated 27.1% of the asset is believed to be comprised of the rarer and more valuable “heavy” rare earths elements (HREE). By comparison, other Western miners of REEs have assets with 0.03%-16% of HREE, and a larger percentage of LREEs, light rare earths elements.

LREEs are primarily used in the manufacturing of magnets, which are important components of electric vehicle motors, medical equipment, wind turbines and data storage systems. HREEs, on the other hand, are critical for national defense and vital for heavy weaponry, but are also used in fiber optics, medical equipment and hybrid vehicles.

A single DDG-51 Aegis Destroyer, for instance, requires a phenomenal 5,200 lbs. of REEs, while an F-35 fighter jet requires nearly 600 lbs.

Time is now running out, and Tanbreez could be the best shot at securing this supply chain for national defense.

Critical Metals Corp (NASDAQ:CRML) has what could shape up to be the largest deposit of HREEs in the world, and it already has an exploitation permit, with hundreds of thousands of assays already undergoing testing. From an infrastructure perspective, Tanbreez is also highly advantageous, with year-round direct shipping access through deep-water fjords that feed into the North Atlantic ocean.

“Everything in your mobile phone, everything in cars comes from these Rare Earth elements. Supercomputers in the future, quantum computing … The windmills that are up, all the magnets in there. It's all Rare Earths,” Sage told Oilprice.com in a recent interview.

“And one thing we don't like to talk about is all the missiles that are being used on the Ukraine war theater and the Israel-Hamas war theater at the moment. They all need to be replenished somehow, and again, that's all Rare Earths. That's why the West is so concerned that China could simply pull the plug,” Sage added.

The Lithium Icing on the Rare Earths Cake

CRML’s new operation is Tanbreez, but Lithium was its first success. In fact, the company will have the first fully licensed lithium spodumene mine in Europe.

In Austria, Critical Metal’s (NASDAQ:CRML) Wolfsberg Project is positioned in close proximity to large lithium import markets in Europe, such as Germany, Belgium, France, Italy and Spain, and planned battery projects in Hungary, Germany, Sweden and the United Kingdom, CRML’s CEO Tony Sage told Autofutures earlier in June.

The mine is fully permitted in perpetuity and is positioned to be the next producing lithium mine in the European Union, and the first to produce battery-grade lithium.

"Substantial exploration and development work has already been conducted by the previous owners including approx. 17,000m of drilling / 1,400m of underground decline, drives and crosscuts. We look forward building upon this foundation and advancing our development plans for this strategic and key asset for Europe’s EV supply chain," he added.

The S-K 1300 was updated just last year, indicating a resource of 12.88 million tonnes at 1% Li2O in Zone 1. Critical Metals signed a binding, long-term lithium offtake agreement with BMW Group in December 2022. Wolfsberg is expected to be completed by 2026, with Critical Metals to supply BMW by 2027. Then, in June this year, BMW made a $15-million pre-payment to CMC, which will be repaid through equal setoffs against lithium delivered. European Lithium (ASX: EUR) has also entered into a binding agreement to build the first regional Lithium Hydroxide Refinery in Saudi Arabia, through a JV with Obeikan Investment Group. CMRL expects to benefit from this JV.

The company’s first goal--to become the first local, battery-grade lithium supplier into an integrated European battery supply chain—was big enough.

Its new goal is to secure one of the largest rare earth’s deposits in the world for national defense, and the results of tests on hundreds of thousands of assays could turn out to be a significant response to China in the coming weeks, months, and years.

The markets don’t seem to have realized the full extent of the acquisition and what it means for the West and the company itself. That will probably change over the coming months as the story is only just making its way into the mainstream media.

Here are some other companies in the critical resources space worth following:

FMC Corporation (NYSE: FMC)

Based in Philadelphia, FMC Corporation is a global agricultural sciences company delivering innovative technology to growers worldwide. The company's diverse portfolio includes a wide range of crop protection products, such as insecticides, herbicides, and fungicides, designed to enhance crop yield and quality while minimizing environmental impact. FMC's focus on research and development has led to the creation of cutting-edge solutions that address the evolving challenges faced by farmers in various regions and climates.

Beyond its agricultural focus, FMC Corporation also has a significant stake in the lithium market, providing essential materials for rechargeable batteries and other high-tech applications. This diversified approach allows the company to leverage its expertise in chemistry and technology to contribute to both the agricultural and energy sectors. As the demand for lithium continues to rise due to the increasing adoption of electric vehicles and renewable energy technologies, FMC's lithium business represents a promising avenue for growth.

BHP Group (NYSE:BHP)

BHP Group is a multinational mining company headquartered in Melbourne, Australia. It is one of the world's largest producers of major commodities, including iron ore, copper, coal, and nickel. BHP's operations span across multiple continents, with significant assets in Australia, the Americas, and Asia.

The company's vast portfolio of high-quality assets includes some of the world's most productive mines and processing facilities. BHP's iron ore operations in Western Australia, for example, are among the largest and lowest-cost in the world. Additionally, the company's copper assets in Chile and Peru are major contributors to global copper supply.

BHP is committed to sustainable development and responsible resource management. The company has set ambitious targets to reduce its carbon emissions, improve water efficiency, and enhance biodiversity conservation. BHP also invests in social programs to support the communities in which it operates, focusing on education, health, and economic development.

Lithium Americas (NYSE:LAC)

Lithium Americas is a Canadian mining company focused on the development of lithium projects in the Americas. The company's flagship project is the Cauchari-Olaroz lithium brine project in Argentina, which is one of the largest and highest-grade lithium deposits in the world. Lithium Americas also has a significant stake in the Thacker Pass lithium clay project in Nevada, which is expected to become a major source of lithium for the growing electric vehicle market.

The company's focus on lithium production is driven by the increasing demand for this critical mineral, which is essential for the manufacture of lithium-ion batteries used in electric vehicles, energy storage systems, and consumer electronics. Lithium Americas is well-positioned to capitalize on this growing demand, with a portfolio of high-quality projects that are expected to come online in the coming years.

Lithium Americas is committed to sustainable development and responsible mining practices. The company has implemented a number of initiatives to minimize the environmental impact of its operations, including water recycling, energy efficiency, and community engagement. Lithium Americas is also working to develop new technologies to improve the efficiency and sustainability of lithium production.

Albemarle Corporation (NYSE:ALB)

Albemarle Corporation is a global specialty chemicals company headquartered in Charlotte, North Carolina. The company operates in three segments: Lithium, Bromine Specialties, and Catalysts. Albemarle is a leading producer of lithium, a critical component in lithium-ion batteries used in electric vehicles, consumer electronics, and energy storage systems. The company's bromine business is a leading producer of bromine and bromine derivatives, which are used in a wide range of applications, including flame retardants, pharmaceuticals, and agricultural chemicals. Albemarle's catalysts business is a leading producer of catalysts used in the refining and petrochemical industries.

Albemarle's focus on specialty chemicals is driven by the growing demand for these products in a variety of end markets. The company's lithium business is well-positioned to benefit from the growing demand for lithium-ion batteries, as the world transitions to a low-carbon economy. Albemarle's bromine business is benefiting from the growing demand for flame retardants in the construction and automotive industries. The company's catalysts business is benefiting from the growing demand for clean fuels and chemicals.

Albemarle is committed to sustainable development and responsible business practices. The company has set ambitious targets to reduce its environmental impact and is investing in new technologies to improve the efficiency and sustainability of its operations. Albemarle is also committed to social responsibility and is working to improve the lives of its employees and the communities in which it operates.

Piedmont Lithium Limited (NASDAQ:PLL)

Piedmont Lithium Limited is an emerging lithium producer focused on developing a world-class integrated lithium business in the United States. The company's core asset is the Piedmont Lithium Project located in North Carolina, a region known for its rich mineral resources. The project hosts a large, high-grade spodumene deposit, which is a key source of lithium for the production of lithium hydroxide, a critical component in lithium-ion batteries.

Piedmont Lithium's strategic location in the United States provides a significant advantage in terms of access to the growing North American electric vehicle and battery manufacturing markets. The company's integrated business model encompasses mining, concentrating, and refining operations, ensuring a reliable and sustainable supply of lithium products to meet the increasing demand from the clean energy sector.

Piedmont Lithium is committed to responsible mining practices and sustainable development. The company prioritizes environmental stewardship, community engagement, and social responsibility in all aspects of its operations. By developing a domestic source of lithium and adhering to high environmental and social standards, Piedmont Lithium is contributing to the growth of a sustainable and resilient lithium supply chain in the United States.

MP Materials Corp. (NYSE:MP)

MP Materials Corp. is the largest producer of rare earth materials in the Western Hemisphere. The company's flagship asset is the Mountain Pass mine in California, which is the only rare earth mining and processing site in North America. The mine produces rare earth oxides and metals, which are essential components in a wide range of high-tech applications, including electric vehicles, wind turbines, and electronics.

MP Materials' integrated operations encompass mining, beneficiation, separation, and finishing processes. This vertical integration allows the company to control the entire rare earth supply chain, from the extraction of raw materials to the production of refined products. The company's focus on technological innovation and operational efficiency has enabled it to become a leading supplier of rare earth materials to the global market.

MP Materials is committed to environmental sustainability and responsible mining practices. The company has implemented a number of initiatives to minimize the environmental impact of its operations, including water recycling, energy efficiency, and waste reduction. MP Materials is also working to develop new technologies to further improve the sustainability of rare earth production.

Rare Element Resources Ltd. (TSX:RES) is a Canadian company focusing on the exploration and development of rare earth elements (REEs), crucial components in modern technologies such as electric vehicles, wind turbines, and electronics. The company’s flagship Bear Lodge project in Wyoming is one of the largest known undeveloped REE deposits globally, positioning Rare Element Resources as a potential significant supplier to the growing REE market.

The company is committed to responsible and sustainable mining practices, minimizing environmental impact and engaging with local communities. Rare Element Resources’ dedication to ethical sourcing and sustainable operations aligns with increasing global demands for responsibly sourced materials, making it an attractive investment opportunity for those interested in the growing REE sector.

With the growing demand for REEs in various high-tech industries, Rare Element Resources is strategically positioned to play a crucial role in the global supply chain. As the company advances the development of its Bear Lodge project and explores other potential REE resources, it aims to contribute to a more sustainable and technologically advanced future.

Avalon Advanced Materials Inc. (TSX:AVL) is a Canadian materials science company specializing in the development and manufacturing of specialty materials for various industries. The company’s expertise lies in high-purity metals, alloys, and specialty chemicals, catering to the needs of electronics, aerospace, and energy storage sectors.

Avalon’s commitment to innovation is evident in its focus on developing advanced materials for lithium-ion and solid-state batteries, crucial components in the growing electric vehicle and renewable energy markets. By addressing the evolving needs of these industries, Avalon is well-positioned to capitalize on the increasing demand for efficient and sustainable energy storage solutions.

With a strong track record in materials science and a focus on cutting-edge technologies, Avalon Advanced Materials is poised for growth in the rapidly expanding market for specialty materials. The company’s dedication to innovation and its diverse portfolio of products make it an appealing investment prospect for those seeking exposure to the materials science sector.

First Quantum Minerals Ltd. (TSX:FM) is a leading global mining company with a diversified portfolio of copper, nickel, gold, and zinc mines and projects across multiple continents. The company’s operations span various countries, including Zambia, the Democratic Republic of Congo, Mauritania, Finland, Spain, Turkey, Argentina, and Peru.

First Quantum Minerals is committed to responsible mining practices, prioritizing environmental stewardship and community engagement. The company strives to minimize its environmental footprint and contribute to the social and economic development of the regions where it operates. With a strong focus on sustainable mining, First Quantum aims to create long-term value for its stakeholders and the communities it serves.

As a major player in the global mining industry, First Quantum Minerals plays a crucial role in meeting the growing demand for essential metals. The company’s diversified portfolio ensures a stable supply of copper, nickel, gold, and zinc, which are critical for various industrial sectors and economic development worldwide. With a commitment to responsible mining and a diversified portfolio, First Quantum Minerals is a reliable and sustainable source of essential metals, contributing to global economic growth and development.

Allkem Limited (TSX:AKE), an Australian mining company specializing in lithium production, plays a crucial role in the global supply chain of this critical mineral. With operations in Australia, Argentina, and Canada, including a significant presence in the lithium-rich Salar de Atacama, Allkem is well-positioned to meet the surging demand for lithium in the electric vehicle and renewable energy sectors. The company’s diverse portfolio of lithium projects includes brine and hard rock resources, providing it with flexibility and resilience in response to market dynamics.

Allkem’s integrated approach to lithium production, from exploration and development to production and refining, ensures a consistent and sustainable supply of lithium products. The company’s commitment to environmental responsibility and social engagement is evident in its efforts to minimize the environmental impact of its operations and contribute to the well-being of local communities.

As the global demand for lithium continues to rise due to the increasing adoption of electric vehicles and renewable energy technologies, Allkem is poised for significant growth. The company’s strong project pipeline and focus on sustainable practices position it as a key player in the global lithium market, contributing to the transition towards a cleaner and more sustainable energy future.

Teck Resources Limited (TSX:TECK), a leading Canadian mining company, operates a diverse portfolio of mining assets, focusing on the production of copper, zinc, steelmaking coal, and energy. With operations in the Americas, Teck is a significant contributor to the global supply of these essential commodities, which are vital for various industries and economic development.

The company’s commitment to responsible mining practices is evident in its efforts to minimize environmental impact, promote safety, and engage with local communities. Teck’s dedication to sustainability aligns with growing global concerns about environmental protection and responsible resource management. The company’s focus on innovation and technology further enhances its operational efficiency and competitiveness in the mining industry.

As a major player in the global mining landscape, Teck Resources plays a crucial role in meeting the world’s demand for essential metals and minerals. With a diversified portfolio, a commitment to sustainability, and a focus on innovation, Teck is well-positioned to navigate the evolving challenges and opportunities of the mining industry, contributing to global economic growth and a more sustainable future.

By. Tom Kool


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Leave a comment
  • louann watson on June 21 2024 said:
    When President Trump mentioned the reserves in Greenland during his tenure, everyone was snickering and laughing. even the leaders in Finland, who have the rights to those deposits, said they would not be available. fast forward to today, when China, also noted by the President, would threaten the worlds supply of neodymium. still no one will give him credit. they are all just nasty, political children...

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