Friday, February 14, 2020 /07:14
PM / By Charles Kennedy of Oilprice.com / Header Image
China has a monopoly on one of the most strategic metals on the planet, and
Washington is anxious to change that.
Global dominance at this point in the game means control of the rare earths
elements that form the backbone of existing technology and the future of
technology, and while everyone is busy playing at war with oil and gas, Beijing
is busy sitting on a monopoly of our most precious strategic metals.
There are 16 metals in total that form the world's strategically critical
rare-earth elements--and China controls the supply of every single one because it
controls 96% of production.
One of these crucial metals is Cesium.
It's worth up to twice the price of gold, ounce for ounce, there are only three
producing mines in the world, and all of them are controlled by China.
The only question in this game now is whether there is any chance for North
America to get its hands-on new cesium of its own to get out from under a
But while there are only three cesium mines in the world, the potential is in
new supply. Of five cesium occurrences in Canada's Ontario province, a small-cap
Canadian explorer called Power Metals owns 100% of three of them (West Joe, Tot Lake and Marko).
The company discovered the pegmatites at West Joe Dyke in August 2018, intersecting high-grade
cesium mineralization in six drill holes when it was targeting lithium instead.
So, the focus now is not on what has been lost to China, but the promise of new
North American critical cesium.
Strategic Is Cesium?
Cesium is extremely rare globally. In May 2018, the United States Department of the Interior
included lithium, cesium and tantalum on its list of Critical Minerals.
The supreme technological war of global dominance can't be won without these
metals, so whoever controls them has the upper hand.
Cesium is described by the German Institute for Strategic Metals (ISE) as "the most electropositive of all stable
elements in the periodic table", and the heaviest of the stable metals.
Cesium is "extremely pyrophoric, ignites spontaneously when in contact
with air, and explodes violently in water or ice at any temperature above -116
Laboratories use cesium compounds for strategic organic chemistry, including in
x-ray radiation for cancer treatments.
The list of commercial and industrial applications is long and varied, from
catalyst promoters, glass amplifiers and photoelectric cell components, to
crystals in scintillation counters, and getters in vacuum tubes.
Much cesium demand also comes from the oil and gas industry, which uses cesium formate brines in
drilling fluids to prevent blow-outs in high-temperature, over-pressurized
In terms of world dominance, the "cesium standard" is the key. This
is the standard by which the accurate commercially available atomic clocks
measure time, and it's vital for the data transmission infrastructure of mobile
networks, GPS and the internet.
That means it has serious defense applications as well, including in infrared
detectors, optics, night vision goggles and much, much more.
At high purity levels, using the 2018 price for 99.98% pure cesium metal, it's
worth about $79 per gram--twice the price of a gram of gold, according to renowned geologist Mickey Fulp. Most uses required 98% pure
cesium, which was set at about $39 for 25 grams in 2018. Otherwise, it's hard
to get a world market price on cesium because there is no trading of this
But imagine China being able to starve manufacturers of something like cesium,
which would seriously disrupt U.S. industry and hinder the development of
critical military equipment. That's exactly why this rare metal was left off Washington's tariff lists in the trade war back-and-forth.
But Dr. Julie Selway, a key geologist for the Ontario Geological Survey during
the tantalum boom of the early 2000s, and now VP of exploration for Power
Metals, says the three properties the company is drilling are hoped to have
similar finds as the strategically important Sinclair mine in Australia.
"They are shipping their resource, which they say is higher than 10%
cesium-oxide, and ours have some that are between 12% and 14% of cesium-oxide," Selway--one of
the world's most renowned experts on pegmatites--told Oilprice.com.
How Deep Is
China has dominated rare-earths since the 1990s with
power in this sector that rivals OPEC for oil--even if it doesn't make the
headlines like oil and gas does.
In 2010, China cut back on exports, triggering major price spikes all over the
world because of the critical nature of these metals to the tech industry.
That woke Washington from its slumber, but only slightly.
Beijing's next move, according to the Wall Street Journal, was to manipulate the market so that
rare earth elements (RREs) were cheaper in China than outside the country. What
this did was prompt some major manufacturers and tech industries to set up shop
in China, where they could get supplies at a lower cost.
In the entire world, there are only three pegmatite mines that can produce
cesium: one is the Tanco mine in Manitoba, the second is the Bitika mine in
Zimbabwe, and the third is the Sinclair mine in Australia.
Where does China fit into this picture? It controls them all, beyond its own
borders, with few players like Power Metals and its three-play Cesium venue
which could challenge that total control.
Washington's emergence from its cesium slumber, however, was short-lived.
According to Fulp, speaking to Kitco, a United States company essentially sold off its
control of cesium to Sinomine Resources of China last summer--even after the
U.S. placing the metal on the critical list. Prior to this June 2019 deal,
cesium production was largely controlled by Boston-based Cabot Corporation, which owned the Tanco mine in Manitoba,
but which also has operations in China. This mine was shut down in 2015, with
demand met from stockpiles.
Now, Tanco and Bitiki are no longer producing, but Sinomine Resources Group
holds all the cesium ore stockpiles.
What that means is that this playing field isn't just of strategic
proportions--but it's locked up.
The only company in the cesium supply chain right now is Chinese, and one of
the only companies on the radar for potential commercial cesium supplies in
North America is Canadian junior Power Metals, which is hoping to prove that
it's sitting on the world's fourth minable deposit of the critical metal.
That's why, finally, in December 2019, the United States and Canada agreed on a
strategy to reduce the need for rare-earth metals mined or
controlled by China.
companies shaking up China's rare-earth dominance:
Resources (NYSE:TECK, TSX:TECK)
Teck could be one of the best-diversified miners out there, with a broad
portfolio of Copper, Zinc, Energy, Gold, Silver and Molybdenum assets. Its free
cash flow and a lower volatility outlook for base metals in combination with a
potential trade war breakthrough could send the stock higher in H2 of this
Teck's share price stabilized last year and many investment banks now see the
stock as undervalued. Low prices for Canadian crude and disappointing base
metals prices weighed on Q4 earnings.
Despite its struggles, however, Teck Resources recently received a favorable
investment rating from Fitch and Moody's, and will likely benefit from its
upgraded score. "Having investment grade ratings is very important to us
and confirms the strong financial position of the company," said Don
Lindsay, President and CEO. "We are very pleased to receive this second
credit rating upgrade."
Hill Resources (NYSE:TRQ ,TSX:TRQ)
Turquoise is a mid-cap Canadian mineral exploration and development company
headquartered in Vancouver, British Columbia. Its focus is on the Pacific Rim
where it is in the process of developing several large mines.
The company mines a diversified set of metals/minerals including Coal, Gold,
Copper, Molybdenum, Silver, Rhenium, Uranium, Lead and Zinc. One of the fortes
of Turquoise hill is its good relationship with mining giant Rio Tinto.
Turquoise has seen its share price languish last year, and the successful
development of its world-class Oyu Tolgoi project in Mongolia is of utmost
important to the future of this miner.
Resources (NYSE:PVG, TSX:PVG)
This impressive Canadian company is engaged in the acquisition, exploration and
development of precious metal resource properties in the Americas. Pretium has
an impressive portfolio and if you can catch the stock while the price is
right, there could be huge opportunity for upside. Additionally, construction
and engineering activities at its top location continue to advance, and commercial
production is targeted for this year.
With Pretium's variety of assets, this mining giant is a key figure in Canada's
resource realm. Investors know a good thing when they see it, and have
definitely taken note of this company's ambitious and forward-looking drive.
International (NYSE:MGA, TSX:MG)
Based in Aurora, Ontario, Magna is a global automotive supplier is gutsy and
innovative--and definitely tuned to the obvious future--clean transportation. A
great catalyst is its development of a combo electric/hydrogen vehicle--a fuel
cell range-extended EV (FCREEV). It's not going to produce them (for now, at
least) but plans to use the model to show off its engineering and design
prowess and produce elements of the electric drivetrain and contract
manufacturing. It's insightful, forward-thinking and smart value/low cost for
Eagle Mines Ltd (NYSE:AEM, TSX:AEM)
Canadian based gold producer, Agnico Eagle Mines is an especially noteworthy
company for investors. Why? Between 1991-2010, the company paid out dividends
every year. With operations in Quebec, Mexico, and Finland, the company also is
taking place in exploration activities in Europe, Latin America, and the United
While Agnico primarily focuses on gold, it made this list because it's a prime
example of sustainability and environmental consciousness, and that means
everything in a world rapidly shifting away from traditional mining.
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