Will Japanese Industry Find Critical Earth Metal Solutions in Kazakhstan?

Bloomberg, on August 12, 2009, published the following report:

Sumitomo Corp. (SSUMY.PK) to Form Venture With Kazatomprom, Nikkei Says

By Fergus Maguire

Aug. 12 (Bloomberg) -- Sumitomo Corp. will form a venture this year with Kazatomprom, the Kazakhstan government-owned nuclear power company, to produce rare-earth metals, Nikkei English News said, without citing anyone.

Annual output is expected to reach 3,000 tons in 2010, the report said. Sumitomo is seeking to increase its supply of the metals used in hybrid and other environmentally friendly vehicles, the report said.

Separately, Toyota Motor Corp.’s (TM) Toyota Tsusho unit plans to spend 40 billion yen ($417 million) to develop resource supplies, mainly rare earths, over the next five years, the report said.

There is one story here but it is of two different time frames for producing new supplies of the critical rare earth metals needed by Japanese industry to ensure that,

1) In the near term, it can continue to make (high temperature operation) permanent magnets for electric motors for green applications, and 2) In the long term, it can continue to make nickel metal hydride batteries for the Japanese OEM automotive industry.

1) There is only one way at all that Kazakhstan, without an existing producing or ready to produce rare earth mine, could conceivably produce, within a year, rare earths at a 3,000 MT per annum rate. That would be if Sumitomo were to extract rare earths from the tailings (residues) from uranium mining in which they, rare earths and thorium, are almost always found. I suspect that Sumitomo has already developed a process to extract rare earths from the possibly immense tailings, which began to accumulate in the Soviet era when Kazakhstan was the Soviet bloc's main supplier of uranium. It may also be true that Kazatomprom has already constructed such a plant but didn't have either or both an efficient technology and the capital to put the plant into operation. Sumitomo is a supplier to, among others, Toyota, and it wouldn't surprise me if some of Toyota's 40 billion Yen for rare earths has been used to buy an off-take of selected rare earth metals from this project.

I do not know how a rare earth refinery with a 3,000 MT per year throughput could be built and in operation within a year, so either it already exists or a deal has been made with China.

2.) With a long term view, Toyota Tsusho has already announced it will participate in the funding of the development of the very large Dong Po rare earth deposit in Vietnam, but this development will easily take 3-7 years to bring a new mine into production, develop an extraction metallurgy, and build a refinery to separate and purify the metals.

Japanese geologists have lately been looking to confirm rare earth and other mineral deposits in Canada. Could something be brewing along the lines of what's happening in Kazakhstan and Vietnam in our northern mineral rich neighbor?

Comments

[Davewmart:]

Very interesting article.
It makes me wonder whether something has not been happening under the radar there for some years.
Toyota are very far from being stupid, and must have realised the importance of securing supplies of rare earths years ago.
It might also make sense for them to play it quiet, to avoid alerting the competition.
Shades of the Great Game, in that region of the world!

Aug 12 08:12 AM

[Jack Lifton:]

Actually it's like Poe's "The Purloined Letter." The solution is sitting right out in front of us, and we don't notice it. Japanese traders speaking Russian and the local Kazakh language(s) have probably been scouting the area for technology metals for years while western "businessmen" looked only at gold, copper, and more recently molybdenum.

Year ago, to expalin the reason why Japanese businesses were rapidly moving into the US market while the reverse wasn't true, the International Herald Tribune published the statistic that 75,000 Japanese businessmen spoke English while 75 American businessmen spoke Japanese. I doubt that the ratio has changed much since then.


On Aug 12 08:12 AM Davewmart wrote:

> Very interesting article.
> It makes me wonder whether something has not been happening under
> the radar there for some years.
> Toyota are very far from being stupid, and must have realised the
> importance of securing supplies of rare earths years ago.
> It might also make sense for them to play it quiet, to avoid alerting
> the competition.
> Shades of the Great Game, in that region of the world!

Aug 12 08:29 AM

[Davewmart:]

Jack, it also makes me wonder if facilities are not being built as we speak for lithium extraction, without any notice of it getting out.
If they haven't secured supplies, the Japanese and more particularly the Koreans are being pretty optimistic that they will be able to keep all the lithium battery factories they are building supplied!

Aug 12 09:12 AM

[John Petersen:]

Now all we need to do is get our government to support policies that insure ready access to the raw materials our industrial base needs. Unfortunately, I've been a student of history for far too long to believe for a minute that people who are our friends today will alway be friends, particularly as their populations become more competitive consumers.

Aug 12 10:06 AM

[MRTTF:]

From my experience (albeit limited) this re-affirms two things that I have seen time and time again over the past several years:

1) Large Japanese corporations, like Toyota, don't make any move without it being well thought out, having the data confirming their suspisions in hand, and the possibility of reaping profit.

2) The Japanese are always thinking in the long term or the bigger picture, whichever you like, to gain market share, not short term profits.


On Aug 12 08:29 AM Jack Lifton wrote:

> Actually it's like Poe's "The Purloined Letter." The solution is
> sitting right out in front of us, and we don't notice it. Japanese
> traders speaking Russian and the local Kazakh language(s) have probably
> been scouting the area for technology metals for years while western
> "businessmen" looked only at gold, copper, and more recently molybdenum.
>
>
> Year ago, to expalin the reason why Japanese businesses were rapidly
> moving into the US market while the reverse wasn't true, the International
> Herald Tribune published the statistic that 75,000 Japanese businessmen
> spoke English while 75 American businessmen spoke Japanese. I doubt
> that the ratio has changed much since then.

Aug 12 10:57 AM

[abatis:]

Jack, I know you have mentioned Lynas several times in the past - have you noticed the Lynas share price lately? RE investment is alpha to me.

Sep 08 07:44 PM