JL: If these materials are critical for our military and our lifestyle, somebody will have to capitalize security and independence. Geography is destiny in geology. The Chinese have these materials. They don't have to pay to develop mines or develop new ways to separate the material.
The only thing that's impeding China is its own internal inflation, its cost of labor and chemicals, its skilled labor. These are going up all of the time. Now, China is looking for REE sources elsewhere in the world.
Isn't this the ideal situation in a capitalist system? We have somebody who wants something we've got. Why aren't we developing it?
TMR: Australia is in China's backyard. Northern Minerals conducted a bench scale test in 2013, using both high-gradient magnetic separation and whole ore floatation circuitry. Could that company take advantage of new techniques to supply demand?
JL: Northern Minerals has a very large Chinese investor who offered to put in enough money to complete the development, if he could take over the company. Management turned him down. CEO George Bauk told me he thinks he can raise the money in Australia without selling out and becoming a foreign-owned company. He's very optimistic.
TMR: Are there other companies in Australia that you are watching?
JL: Alkane Resources Ltd. is producing and selling gold. It has an offtake for its REEs. Alkane is moving along, going into production.
TMR: Any closing thoughts?
JL: In the West, our cowboy capitalism is looking for new ways to apply existing technology to REE separation. A genuine change in how REEs are processed may be the salvation of the non-Chinese industry. It costs a bundle to build a mine and processing plant—amounts of money the market cannot support because there isn't enough profit to be made to repay the debt. It's way too late to raise that amount of equity.
Lynas and Molycorp did raise those amounts of equity. They built REE separation plants and developed their mines and neither one of them is making any money, because they chose to focus on light rare earth separation.
I'm advising the industry to look at processing together because even if all the names I mentioned in this interview were to reach their target production, there still wouldn't be enough material to meet existing demand. If you built a central processing plant in North America and that cost were taken off the business model, that might help convince investors to fund one or all of them. We need all of them.
TMR: Thanks for your time and your insights.