Greenland Minerals and Energy continue to advance Kvanefjeld Project, investor interest growing

Shares in Greenland Minerals and Energy (ASX: GGG) have risen by as much as 20% on the ASX today, after the company provided an update on the Environmental Impact Assessment for its 100% owned Kvanefjeld Project in Greenland, which boasts world class deposits of rare earth elements, uranium, and zinc).

The company said in a statement that following detailed reviews conducted by the Government of Greenland (GoG), and its advisory groups in 2016, it was continuing to update the Environmental Impact Assessment (EIA) for the Kvanefjeld Project through 2017.

Independent consultants and regulatory bodies from Canada have also been involved in the review process, also known as the guidance phase, which is the first step in the processing of a mining license application for the project. Based on recommendations, the impact assessments are then updated prior to public consultation.

A pre‐feasibility study was finalised on the project in 2012, and a comprehensive feasibility study was completed in May, 2015, and updated in April, 2016. The studies demonstrate the potential for a large‐scale, long‐life, cost‐competitive, multi‐element mining operation. An exploitation (mining) license application for the initial development strategy is currently being processed by the Government of Greenland and their advisory groups.

According to Greenland Minerals and Energy, no major environmental risks have been identified for the project, and much of the feasibility design has been accepted as appropriate and suitable for Greenlandic conditions. In order to address feedback from advisory groups, company personnel have conducted a number of meetings with GoG representatives through 2017.

In early June, representatives from Greenland’s EAMRA, and the DCE met with the company representatives in Copenhagen to address outstanding issues. The additional work programs to expand some datasets are underway, and are expected to be concluded over the next couple of months. The results will then be incorporated into the updated studies.

As the company advances through the permitting process, active work programs are also underway with strategic partner Shenghe Resources Holding Co. Ltd that aim to improve the Project cost structure and ensure that the Project is effectively aligned with downstream rare earth processing.

Commenting on the status of these key studies, Greenland Minerals and Energy Managing Director, Dr John Mair, said, “Through 2017 we’ve made a lot of progress toward closing out all environmental studies associated with Kvanefjeld. Reviews by expert consultants on behalf of the Greenland Government provided recommendations and guidance to constructively assist in presenting very robust studies. Importantly, no major issues have been identified, but our aim is to deliver high‐quality assessments to support stakeholder confidence. With input from the EAMRA and DCE we planned some additional work programs, which have been implemented and are progressing well.”

Kvanefjeld Project is one of very few advanced rare earth projects globally and is well‐positioned to be internationally important point of primary rare earth (RE) supply in what continues to be a rapidly evolving market. Kvanefjeld is projected to be a significant, cost‐competitive producer of all key rare earths including neodymium, praseodymium, terbium and dysprosium.

Greenland Minerals and Energy has stated that it believes that as the future structure of the RE industry becomes clearer, largely due to Chinese reforms, the projected demand outlook is increasingly strong. Demand growth is underpinned by government policy (notably China and India) that is pushing to reduce pollution associated with carbon emissions, and promote clean, energy efficient technologies.

They believe this is driving strong growth in the permanent magnet sector to which RE’s are essential. Hybrid and electric vehicles, wind turbines, industrial robots (manufacturing) and a growing range of energy efficient technologies all utilise permanent magnets.

The company is currently working with strategic partner and 12.5% shareholder Shenghe Resources Holding Co Ltd (Shenghe) to connect Kvanefjeld to the growing international RE market through leading downstream processing technology.

Owing to Kvanefjeld’s scale, favourable production profile across all key REs and long projected mine life, successful development will see Greenland become a globally significant, long‐term supplier of these important metals.

After a long period of consolidation through 2016 RE prices have been on the increase since the start of 2017. For the magnet metals (especially neodymium, praseodymium and terbium) and lanthanum the price increases have been significant.

Using January 1 2016 as a base, the price of terbium oxide is up over 40%, the prices of lanthanum oxide is up nearly 30% and for praseodymium and neodymium oxide up around 20%. Prices have not moved in response to a short term stimulus to the market, rather prices are moving to reflect underlying changes to the supply and demand dynamics for rare earths. Demand is increasing and China’s Rare Earth Industry Development Plan for 2016 – 2020 will see continuing tightening of rare earth supply.

Greenland Minerals and Energy has stated that it believes it has taken until the end of 2016 for the improved market dynamics to be reflected in RE prices because of the level of stock of intermediate RE products that had built up in the supply chain since 2012. The sharp fall in demand after the price spike in 2011 was not matched by a cutback in production and significant stocks of intermediate products developed as a consequence, particularly through illegal supply networks.

China established its dominant position in the RE processing industry on the back of a secure and abundant domestic source of RE raw materials coupled with a commitment to developing downstream processing technology and capacity. Over the last decade the Chinese Government has taken a number of strategic steps to protect the dominant position of its domestic RE industry.

Acknowledging that domestic reserves of REs were being depleted at an unsustainable rate, from 2005 the Chinese Government steadily reduced quotas allocated to exporters of rare earths. In 2005 export quotas totalled ~65,000 tonnes. In 2010 the volume of allocated export quotas [~30,000t] was, for the first time, set below expected demand. This precipitated panic in the market and the RE pricing bubble of 2011 was the result.

The 2011 price bubble stimulated mining and processing outside of the official channels in China and compromised Government efforts to date to conservatively utilise what were increasingly being regarded as long term strategic assets.

The Chinese Government responded with a number of initiatives with the objective of reasserting control over its domestic rare earth industry. These steps include:

1. Consolidation of the industry into 6 major state run regional entities.
2. Elimination of export quotas and tariffs and the introduction of an export licenses.
3. Curbing production occurring outside of the formal production quota system [the steady decline in prices has helped to organically curb this unauthorized production].

While it has taken some time for the impact of these changes to be felt, a general tightening of the supply of RE is now occurring as a result and it is clear that developments in China will continue to drive the evolution of the RE market.

This is is a syndicated post. Read the original version of this content at – Greenland Minerals and Energy : Rare Earth Market Prices Rise, Sector Outlook Improves, Kvanefjeld Project Well Positioned.