The Exchanges

Q at the beginning, the reason rare earth elements are so valuable in a magnet is they make the magnet stronger. And so is it true that the applications where these rare earth free permanent magnets make the most sense are the applications where the, the requirement for magnet strength is lower? And that's what's true about speakers, for example, but not as true about wind turbines and electric vehicle motors.

A Correct. So how strong the magnets are per unit of volume. So that's, that's one indication for quality of the magnet. And the second one is at high temperature, they still remain magnetic. So they don't lose their magnetic properties at elevated temperatures. And now when you have a speaker usually is at room temperature, maybe a little bit elevated, elevated temperature. But when you have a traction motor of an electric vehicle, because of the rotation, you usually have heat, heat in there. So that's a little bit different game in there. So Those qualities and, and the energy density in the magnet basically are the reasons that some of those magnets, uh, haven't found use in high-end applications in industry just yet.

AI assessment note: “Correct. So how strong the magnets are per unit of volume.”

Q said, like, like lithium, cobalt, nickel, and so on, where, you know, there's this secular growth trend in demand. Um, we'll come back to demand. I want to talk about supply. So let's start with where, where we get rare earths from. When, when there's virgin mining today, where, where are the rare earths in the world? Um, and then walk me through the supply chain as it exists today.

A Sure. Absolutely. So, uh, two things. If it doesn't grow, you mine it. So we start with mining. And the second thing, rare earth elements are recycled less than one percent globally. Those are among the least circular metals that we know of out there. So basically, the primary source of rare earth elements today is mining of rare earth elements. About 60% of that happens in China, and the other 40%, give or take, is happening outside In other countries, including the US. Now, that's 60%, uh, uh, in China, some of that is byproduct of iron oxide mining as well. But overall, majority of mining happening in, in, in China. Uh, it happens that in the downstream processing though, majority of those mined materials outside China are shipped to China. So China actually, like a vacuum here, brings in all the material to China and processes and produces magnets. The processing is over 90% done in China, and, uh, magnet manufacturing over 95% done in China. And from there, it's shipped around in, in, in, in, in final products in electric motors and, and other, uh, units, uh, for consumption all over, all over the world.

AI assessment note: “About 60% of that happens in China, and the other 40%, give or take”

Q on, which is recycling. You said before that we Only recycle one percent of rare earths today, which, you know, anybody who knows something about lots of other commodity metal industries like copper and steel and so on, we recycle a fair amount of all those things. Why is it that we don't recycle rare earths today? And then obviously that will dovetail into what are you doing about it?

A Absolutely. Yes, true. Uh, rare earth elements, which actually when Department of Energy looks into, uh, uh, critical metals, Categorizes them as the most critical metals in the, uh, uh, category of how critical those are. Uh, happens to be the least circular metals as well, so we don't recycle much of those at all today. Uh, uh, simply because when we recycle end-of-life products, uh, magnets being magnetic attach to steel and travel with steel into steel recycling plants, iron recycling plants. And because of the chemistry in the steel recycling plants, rare earth elements report to a phase or chemistry and steel production plant that is called slag. It's a glass, just looks like glass on our windows really, and rare earth elements are locked inside the glass for good forever, and thermodynamically really stable, and you can spend a lot of money recycling those and recover those, but that would not make you money. Um, would be very environmentally pollutive as well. So that's the main reason why we don't recycle rare earth elements today, because we lose them into steel, uh, uh, recycling plants.

AI assessment note: “magnets being magnetic attach to steel and travel with steel into steel recycling plants”

Q All right, let's start with a bit of a, I guess, a deeper version of a rare earths one-on-one, because I think it's important. I've seen too many headlines that don't seem to catch it. Remind me what rare earths actually are, rare earth elements. What are they? What are they used for?

A So, Shail, I was on the program about a year ago. Lots have happened, so great to be back here. Rare earth elements, those are the metals that sit at the bottom of periodic table. We have Uh, 17 of those, uh, on periodic table, uh, that usually when you mine for rare earth elements, they come all in one basket all together. Uh, But only few of them are absolutely critical for us, and those are rare earth elements that we use in magnets. More specifically, light rare earths, such as neodymium and praesodymium, and heavy ones, such as dysprosium and terbium, and also samarium, which we use them in specific kind of magnets. Those are the magnet rare earth elements, which are the most critical ones. Uh, now, very briefly, when we use Rare earth elements in magnets , we end up with the most strong magnets that we are aware of, or we can produce on our planet. And when we use very strong magnets in electric motors, we end up with highest efficiency in those electric motors. That's why it's, uh, those electric motors and rare earth magnet, because of the supply chain, is critical for electrification and, and those applications.

AI assessment note: “Rare earth elements, those are the metals that sit at the bottom of periodic table.”

Q of a journey with rare earth elements where China, I think more so than other critical minerals and area areas of critical minerals, where China has done an extraordinary job of getting a stranglehold on many of those supply chains. I think it's particularly true in rare earths. So can you walk me through the history of China and its role in dominance and in the rare earth supply chain?

A So absolutely. So China, some 30 years ago, uh, 25 years ago, they, they came to the conclusion that they want to be, uh, the, uh, the, the, the country that controls or processes majority of rare earth magnets, uh, in the world. So with that planning, they, they basically pushed forward. They started the mining operations in China. They brought in the supply chain of magnets into China. They started mining, Separation, metallization, magnet manufacturing. Now, availability of magnets in China helped China to bring in the balance of the supply chain, the risk of the supply chain into China. Now, why this is important? Rare earth elements may be a few million dollar market, 20, twenty-five billion dollar market, but rare earth magnets unlock multi-trillion dollar Market for companies. So with that mindset, Chinese wanted to hold the reverse magnet supply chain in their country, and they did the planning, and they actually did implement that. But I will give you a few numbers here. 63% of rare earth mining happens in China.

AI assessment note: “They started mining, Separation, metallization, magnet manufacturing.”

Q All right, let's start with a bit of a, I guess, a deeper version of a rare earths one-on-one, because I think it's important. I've seen too many headlines that don't seem to catch it. Remind me what rare earths actually are, rare earth elements. What are they? What are they used for?

A So, Shail, I was on the program about a year ago. Lots have happened, so great to be back here. Rare earth elements, those are the metals that sit at the bottom of periodic table. We have Uh, 17 of those, uh, on periodic table, uh, that usually when you mine for rare earth elements, they come all in one basket all together. Uh, But only few of them are absolutely critical for us, and those are rare earth elements that we use in magnets. More specifically, light rare earths, such as neodymium and praesodymium, and heavy ones, such as dysprosium and terbium, and also samarium, which we use them in specific kind of magnets. Those are the magnet rare earth elements, which are the most critical ones. Uh, now, very briefly, when we use Rare earth elements in magnets , we end up with the most strong magnets that we are aware of, or we can produce on our planet. And when we use very strong magnets in electric motors, we end up with highest efficiency in those electric motors. That's why it's, uh, those electric motors and rare earth magnet, because of the supply chain, is critical for electrification and, and those applications.

AI assessment note: “those are the metals that sit at the bottom of periodic table. We have 17”

Q of a journey with rare earth elements where China, I think more so than other critical minerals and area areas of critical minerals, where China has done an extraordinary job of getting a stranglehold on many of those supply chains. I think it's particularly true in rare earths. So can you walk me through the history of China and its role in dominance and in the rare earth supply chain?

A So absolutely. So China, some 30 years ago, uh, 25 years ago, they, they came to the conclusion that they want to be, uh, the, uh, the, the, the country that controls or processes majority of rare earth magnets, uh, in the world. So with that planning, they, they basically pushed forward. They started the mining operations in China. They brought in the supply chain of magnets into China. They started mining, Separation, metallization, magnet manufacturing. Now, availability of magnets in China helped China to bring in the balance of the supply chain, the risk of the supply chain into China. Now, why this is important? Rare earth elements may be a few million dollar market, 20, twenty-five billion dollar market, but rare earth magnets unlock multi-trillion dollar Market for companies. So with that mindset, Chinese wanted to hold the reverse magnet supply chain in their country, and they did the planning, and they actually did implement that. But I will give you a few numbers here. 63% of rare earth mining happens in China.

AI assessment note: “China, some 30 years ago, uh, 25 years ago, they, they came to the conclusion”

Q about what to do about it, actually, I want to go back to the geopolitics for 1:02, because as we've said multiple times, um, China is pretty dominant here. Trade tensions between China and the Western world have been high of late, and that has trickled down into rare earth world. So what's the latest on China export curbs in rare earths, and what are we to make of it?

A So, one thing that we really were expecting to happen a few years ago happened last December. China put a pause on exporting of any technology related to rarest elements, mining and recycling and processing. So that's, that's really important to understand simply because they are trying to maintain their dominance in this space and not give it away. Uh, At the same time, to counterbalance that, we have IRA and other, other vehicles in North America, Europe, and other jurisdictions to, to help industries to, to grow in those countries. For instance, Department of Defense, Defense awarded, uh, uh, Linus in Texas with over two hundred million dollars to, to build capacity on refining of, uh, mixtures, oxides, or Department of Defense awarded over a hundred million dollars to Vacuum Schmitz, a magnet manufacturing company, to build their facility in, in South Carolina, which we have partnered with them. So, So there's a lot of efforts in this space happening to reduce the dominance and dependence of air sediment supply chain with China. Uh, and I, and I'm really optimistic on this side because those efforts, uh, I, I really think this time around are being done really nicely and, and, and the right way they should be done. Uh, but still in 2024, we are heavily dependent on China on sourcing of those materials.

AI assessment note: “China put a pause on exporting of any technology related to rarest elements”

Q on, which is recycling. You said before that we Only recycle one percent of rare earths today, which, you know, anybody who knows something about lots of other commodity metal industries like copper and steel and so on, we recycle a fair amount of all those things. Why is it that we don't recycle rare earths today? And then obviously that will dovetail into what are you doing about it?

A Absolutely. Yes, true. Uh, rare earth elements, which actually when Department of Energy looks into, uh, uh, critical metals, Categorizes them as the most critical metals in the, uh, uh, category of how critical those are. Uh, happens to be the least circular metals as well, so we don't recycle much of those at all today. Uh, uh, simply because when we recycle end-of-life products, uh, magnets being magnetic attach to steel and travel with steel into steel recycling plants, iron recycling plants. And because of the chemistry in the steel recycling plants, rare earth elements report to a phase or chemistry and steel production plant that is called slag. It's a glass, just looks like glass on our windows really, and rare earth elements are locked inside the glass for good forever, and thermodynamically really stable, and you can spend a lot of money recycling those and recover those, but that would not make you money. Um, would be very environmentally pollutive as well. So that's the main reason why we don't recycle rare earth elements today, because we lose them into steel, uh, uh, recycling plants.

AI assessment note: “magnets being magnetic attach to steel and travel with steel into steel recycling plants”

Q as commodity metals like copper. Step two, you take that magnet, you send it to a central processing facility. That processing facility gets you your basket of rare earths, mixed rare earth oxides, out of the magnet. Um, I guess the question is, why two steps? You know, you're doing this, this hub and spoke model. Why is that the right way to, to run this kind of recycling operation?

A Great question. So, we do recycle end of life products that carry magnet. And end of life products consumed by human have really large entropy, meaning that they are distributed on our planet. Wherever we have more population, we will have more of those end of life products. Uh, In recycling business, one of your key elements to optimize for is your logistics and shipping and handling costs. So we would like to be closer to our feedstock sources. From that perspective, having a few, for instance, in North America, spokes will make sense. So we would be closer to the centers where those end-of-life products are available. We will process those. And simply put, IREN Aluminum and copper have large market with, with distributed market all over the planet, so you can tap into that market. But magnets, which are less than five percent of feet that comes to a spoke, could be shipped to a central plant, and you could, for whole North America, you could have one central plant, one hub, and process the magnets in there and produce the rare earth oxide in there. So that would give you the Uh, uh, optimum, uh, operating costs on the spoke site and bringing in feedstock and also optimum capital costs on the chemical plant, having just one central location to do so.

AI assessment note: “give you the optimum operating costs on the spoke site... and also optimum capital costs”

Q Okay, so, alright, so substitution may play a role eventually. Kind of hard to tell, you know, technology's not quite there yet, but you could imagine that. So second option is just ramping up supply ex-China. What do you see happening there? And, and that's supply both from a, Mining perspective, and then obviously, equally importantly, from a processing and refining perspective?

A This is, this is where I'm quite a bit optimistic. So, uh, for instance, mining industry in U.S. and other jurisdictions are looking into extraction and processing of rare sediments. Uh, for instance, MP materials in past few years have shown that they can basically mine and ship the material to China and process it in China. So, so, There is already one step of the, uh, process completed in the U.S. Now they're looking into downstream to bring the processing back to U.S. and process the material up until production of magnet through MP materials. So, they have been having some, uh, uh, press releases on that side in the past few months and, and making advancements on, on production of magnet and, and also production of, uh, high quality neodymium, prasodemium in, in, in, in U.S. on that side as well. Uh, I think mining and processing is the area that we have spent a lot of money in North America and Europe, of course, on it as well, and eventually will come very handy. Simply put, on the mining side, we have resources out there that are producing concentrate today, so that, that's good. On, on refining side, for instance, Linus, that already is refining in Malaysia, is building a plant in Texas. So that's another really strong indication that Very, very likely we will have refining capacity in the U.S. as well. And on magnet manufacturing side, also companies like Vacuum Schmi…

AI assessment note: “Linus, that already is refining in Malaysia, is building a plant in Texas.”

Q Right. Okay, so how do we solve that?

A So, uh, we do have two set of technologies in our company. The first technology, basically, in our spoke operations, uh, separates magnets from everything else. So, imagine, uh, a, a, a, a traction motor of an electric vehicle comes in. We, we separate copper, aluminum, steel, and magnet. Into four different buckets. Now, copper steel, aluminum, they already are known in the market how to treat those, so we sell those off. Magnet, we hold on to it, we send it to a secondary operation or technology that we have in the company, which is the core, the technology is the core of our hub operation now, so we have a spoken hub model. In our hub, magnets would come in, and with hydrometallurgy process, we would basically Uh, process those magnets, and we produce mixed earth oxide. Now, I will point out that our mixed earth oxide is one of the highest quality mixed earth oxide today available in the market, actually, simply because it's, it's purely, uh, concentrated with, uh, magnet rarest metals.

AI assessment note: “In our hub, magnets would come in, and with hydrometallurgy process, we would basically”

Q said, like, like lithium, cobalt, nickel, and so on, where, you know, there's this secular growth trend in demand. Um, we'll come back to demand. I want to talk about supply. So let's start with where, where we get rare earths from. When, when there's virgin mining today, where, where are the rare earths in the world? Um, and then walk me through the supply chain as it exists today.

A Sure. Absolutely. So, uh, two things. If it doesn't grow, you mine it. So we start with mining. And the second thing, rare earth elements are recycled less than one percent globally. Those are among the least circular metals that we know of out there. So basically, the primary source of rare earth elements today is mining of rare earth elements. About 60% of that happens in China, and the other 40%, give or take, is happening outside In other countries, including the US. Now, that's 60%, uh, uh, in China, some of that is byproduct of iron oxide mining as well. But overall, majority of mining happening in, in, in China. Uh, it happens that in the downstream processing though, majority of those mined materials outside China are shipped to China. So China actually, like a vacuum here, brings in all the material to China and processes and produces magnets. The processing is over 90% done in China, and, uh, magnet manufacturing over 95% done in China. And from there, it's shipped around in, in, in, in, in final products in electric motors and, and other, uh, units, uh, for consumption all over, all over the world.

AI assessment note: “About 60% of that happens in China, and the other 40%, give or take”

Q about what to do about it, actually, I want to go back to the geopolitics for 1:02, because as we've said multiple times, um, China is pretty dominant here. Trade tensions between China and the Western world have been high of late, and that has trickled down into rare earth world. So what's the latest on China export curbs in rare earths, and what are we to make of it?

A So, one thing that we really were expecting to happen a few years ago happened last December. China put a pause on exporting of any technology related to rarest elements, mining and recycling and processing. So that's, that's really important to understand simply because they are trying to maintain their dominance in this space and not give it away. Uh, At the same time, to counterbalance that, we have IRA and other, other vehicles in North America, Europe, and other jurisdictions to, to help industries to, to grow in those countries. For instance, Department of Defense, Defense awarded, uh, uh, Linus in Texas with over two hundred million dollars to, to build capacity on refining of, uh, mixtures, oxides, or Department of Defense awarded over a hundred million dollars to Vacuum Schmitz, a magnet manufacturing company, to build their facility in, in South Carolina, which we have partnered with them. So, So there's a lot of efforts in this space happening to reduce the dominance and dependence of air sediment supply chain with China. Uh, and I, and I'm really optimistic on this side because those efforts, uh, I, I really think this time around are being done really nicely and, and, and the right way they should be done. Uh, but still in 2024, we are heavily dependent on China on sourcing of those materials.

AI assessment note: “China put a pause on exporting of any technology related to rarest elements”

Q as commodity metals like copper. Step two, you take that magnet, you send it to a central processing facility. That processing facility gets you your basket of rare earths, mixed rare earth oxides, out of the magnet. Um, I guess the question is, why two steps? You know, you're doing this, this hub and spoke model. Why is that the right way to, to run this kind of recycling operation?

A Great question. So, we do recycle end of life products that carry magnet. And end of life products consumed by human have really large entropy, meaning that they are distributed on our planet. Wherever we have more population, we will have more of those end of life products. Uh, In recycling business, one of your key elements to optimize for is your logistics and shipping and handling costs. So we would like to be closer to our feedstock sources. From that perspective, having a few, for instance, in North America, spokes will make sense. So we would be closer to the centers where those end-of-life products are available. We will process those. And simply put, IREN Aluminum and copper have large market with, with distributed market all over the planet, so you can tap into that market. But magnets, which are less than five percent of feet that comes to a spoke, could be shipped to a central plant, and you could, for whole North America, you could have one central plant, one hub, and process the magnets in there and produce the rare earth oxide in there. So that would give you the Uh, uh, optimum, uh, operating costs on the spoke site and bringing in feedstock and also optimum capital costs on the chemical plant, having just one central location to do so.

AI assessment note: “optimum operating costs on the spoke site... and also optimum capital costs”

Q Do we know, is, is that technology? Is whatever technology China has developed, whatever process, processes, I suppose, China has developed for, for separation, metallization, magnet production, are they so distinct and so much better because they've been so dominant that It would be difficult to replicate outside China, or if not replicate, then develop our own process technology?

A I believe we can develop our own technology outside China, but those technologies readily available in China are not for, for free for other part of the world to be, uh, to be bought and imported to those countries anymore. So we can't really rely on those Chinese technologies anymore, and we can't have them in, in, for instance, in the US. In fact, I am aware of Companies that they really relied on those Chinese technologies, and now they are having challenges with bringing those equipment into the U.S. and Europe. Uh, so they, their projects have been suffering from that. So, uh, one thing that happens in mining, sorry, on processing and magnet manufacturing side is those industries are heavily dependent on IPs, patents, on how to make, for instance, Very strong magnets, very efficient magnets with minimum consumption of heavy rare earth elements. And Chinese magnet manufacturers in the past many years have been investing a lot of dollars on that. And now they own a good portfolio of patents and IPs that, uh, helps them to basically quarter the market on how to make those magnets within the borders of China and not export the technology outside.

AI assessment note: “I believe we can develop our own technology outside China, but”

Q What do we know about what export controls means, right? It's a, it could be nothing, and it could be a strangle.

A It's, it's, it's going to be really a step that China is going to use it. So usually when I want to explain this, I say, when you create a process for something, it's only with the intention that you want to do that thing. So process makes it easier for you to, to have a control on it. Now, China has been signaling that rare earth elements are absolutely important for them. They want to maintain their dominance, and they are not shy to utilize their dominance in the market whenever they need to, to enforce something. Now, they, Control the export of or banned export of technology and equipment. So the world is really connected and in need of the magnets that come from China. Then they nationalize the companies. So now they have better control on the products that are being exported from China. And the last step is export control. This is where there is a specific paperwork needed for every batch of exported material from China that contains any of those rare earth elements. That you have to do the paperwork. My understanding and my conversations with, uh, with companies, different companies in this space is that, uh, it's been two months now that companies are waiting for some of those export control documentations to be implemented, and it's communicated with them that they should wait for a few more months of work before the export control process is fully in place for Chines…

AI assessment note: “This is where there is a specific paperwork needed for every batch of exported material”

Q or in Australia, and then a lot of the refining takes place in China. So is the reason that China is dominant on the mining side because the resource happens to be in China, or is it just that China put more effort and investment into, into, you know, building a rare earth mining industry, or as you said, a byproduct of, of iron mining, um, than other countries have?

A Oh, the combination of both Silicon and Canada and US in the 19 sixties and seventies, US and Canada used to be a leader in production of earth elements. Significant production of earth elements from mining side was done in other countries as well, outside China. Mining of earth elements comes with some unique challenges. For instance, radioactivity of ores that come off The mines usually is one of the challenges that radioactive materials are, uh, from concentration perspective, high enough that they cause really environmental problem on that side, but low enough that, uh, they can't be economically recovered from the, from the material. So things like that, uh, over the time, uh, basically put pressure on mining of those metals outside China, in North America specifically, and those eventually ended up in In China. So China gradually picked up on production and mining of those metals, as well as, uh, the other environmental impacts. After mining, when you have the ore or concentrate that comes off a mine, usually the chemical process that you would require to, to, to put the material through, to get to the metals at the back end is pretty, uh, environmentally, uh, uh, I'm gonna say challenging process. And, and when you have that in North America, it's basically, ah, ah, not ideal. So we shipped those processing capacity in the past 2030 years to China, and all of a sudden we…

AI assessment note: “the combination of both Silicon and Canada and US in the 19 sixties”

Q already, particularly on the mining side in California. You just do a lot more of that. And then the third is, is recycling, which we'll, we'll save for the end, because that's where you're focused. But let's talk about those first two first. You know, what have you seen out there in terms of developments to try to make rare earth elements less necessary if we are building permanent magnets?

A Sure. Uh, so, well, let's start with rare earth-free magnets, because there is a conversation going on on that, and some companies are looking into design of rare earth-free magnets. Just to be clear, rare earth-free magnets do exist today. So, al-nickel group of magnets and ferrite group of magnets already out there, are already out there. Uh, the industry wants to create newer category of Rare's free magnets that possibly they could use, uh, in substitution to permanent, rarest permanent magnets in electric vehicles, wind turbines, and other applications. I don't believe we are there yet, uh, but out of necessity, I believe this is the right step to take, and some of those magnets already are being produced by some companies out there in, in, in the U.S. as well, and, and, uh, uh, appears that some of those magnets eventually will be consumed in speakers industry and others Similar industries. Uh, uh, again, uh, the majority of drive of rare earth element consumption, especially on the magnet side, are gonna come from wind turbines, from, from electric vehicles, and, and some other applications that are, that speakers are a small portion of that. So we still, we still will have the demand for, uh, uh, rare earth permanent magnets out there in the next, uh, Years to come. I, I haven't seen a solution to that just yet.

AI assessment note: “rare earth-free magnets do exist today. So, al-nickel group of magnets and ferrite group”

Q or in Australia, and then a lot of the refining takes place in China. So is the reason that China is dominant on the mining side because the resource happens to be in China, or is it just that China put more effort and investment into, into, you know, building a rare earth mining industry, or as you said, a byproduct of, of iron mining, um, than other countries have?

A Oh, the combination of both Silicon and Canada and US in the 19 sixties and seventies, US and Canada used to be a leader in production of earth elements. Significant production of earth elements from mining side was done in other countries as well, outside China. Mining of earth elements comes with some unique challenges. For instance, radioactivity of ores that come off The mines usually is one of the challenges that radioactive materials are, uh, from concentration perspective, high enough that they cause really environmental problem on that side, but low enough that, uh, they can't be economically recovered from the, from the material. So things like that, uh, over the time, uh, basically put pressure on mining of those metals outside China, in North America specifically, and those eventually ended up in In China. So China gradually picked up on production and mining of those metals, as well as, uh, the other environmental impacts. After mining, when you have the ore or concentrate that comes off a mine, usually the chemical process that you would require to, to, to put the material through, to get to the metals at the back end is pretty, uh, environmentally, uh, uh, I'm gonna say challenging process. And, and when you have that in North America, it's basically, ah, ah, not ideal. So we shipped those processing capacity in the past 2030 years to China, and all of a sudden we…

AI assessment note: “Oh, the combination of both”

Q at the beginning, the reason rare earth elements are so valuable in a magnet is they make the magnet stronger. And so is it true that the applications where these rare earth free permanent magnets make the most sense are the applications where the, the requirement for magnet strength is lower? And that's what's true about speakers, for example, but not as true about wind turbines and electric vehicle motors.

A Correct. So how strong the magnets are per unit of volume. So that's, that's one indication for quality of the magnet. And the second one is at high temperature, they still remain magnetic. So they don't lose their magnetic properties at elevated temperatures. And now when you have a speaker usually is at room temperature, maybe a little bit elevated, elevated temperature. But when you have a traction motor of an electric vehicle, because of the rotation, you usually have heat, heat in there. So that's a little bit different game in there. So Those qualities and, and the energy density in the magnet basically are the reasons that some of those magnets, uh, haven't found use in high-end applications in industry just yet.

AI assessment note: “Correct. So how strong the magnets are per unit of volume.”

Q So, we'll come back in a few minutes, I think, to what are the solutions to this geopolitical challenge that we face, um, but first, just can you walk through the steps from Raw ore mining to a magnet that goes into a motor that goes into a vehicle. Um, what are the steps along that process?

A So it starts with mining. Uh, so you produce, uh, well, you, you mine the ore. Uh, again, majority of that happens in China. Uh, to some extent that happens in California as well, uh, by MP materials. The next step is to take the ore, which has only one or two percent rarest element in it, sometimes even less than that, to a product that is called concentrate. Now concentrate usually has 50, 60% rarest oxide value in it, and, uh, that also is quite a bit produced in China and a little bit outside China as well. Now, uh, Majority of concentrates now are being shipped to China. When it comes to processing now, give or take, 90% of concentrates are processed in China. In this process, basically, you take the concentrate and with very heavy chemical process, drive it all the way to now called mixed rare earth oxide, which is a basket of rare earth elements that comes off as a final product from the concentrate. Now, mixed red airs oxide Really depends. The quality of mixed rarest oxide in each plant, or each deposit, will depend on the ore that they process. For instance, for, for the material from California that is shipped to China, usually you end up with about 70 to 80% of lanthanum and cerium oxide. Those are the metals that don't carry much value. Uh, and, and this number will be different in other Mixed earth oxides that come off other deposits, but universally, 7080, 85% of…

AI assessment note: “it starts with mining... The next step is to take the ore... to a product that is called concentrate.”

Q Okay, so, alright, so substitution may play a role eventually. Kind of hard to tell, you know, technology's not quite there yet, but you could imagine that. So second option is just ramping up supply ex-China. What do you see happening there? And, and that's supply both from a, Mining perspective, and then obviously, equally importantly, from a processing and refining perspective?

A This is, this is where I'm quite a bit optimistic. So, uh, for instance, mining industry in U.S. and other jurisdictions are looking into extraction and processing of rare sediments. Uh, for instance, MP materials in past few years have shown that they can basically mine and ship the material to China and process it in China. So, so, There is already one step of the, uh, process completed in the U.S. Now they're looking into downstream to bring the processing back to U.S. and process the material up until production of magnet through MP materials. So, they have been having some, uh, uh, press releases on that side in the past few months and, and making advancements on, on production of magnet and, and also production of, uh, high quality neodymium, prasodemium in, in, in, in U.S. on that side as well. Uh, I think mining and processing is the area that we have spent a lot of money in North America and Europe, of course, on it as well, and eventually will come very handy. Simply put, on the mining side, we have resources out there that are producing concentrate today, so that, that's good. On, on refining side, for instance, Linus, that already is refining in Malaysia, is building a plant in Texas. So that's another really strong indication that Very, very likely we will have refining capacity in the U.S. as well. And on magnet manufacturing side, also companies like Vacuum Schmi…

AI assessment note: “Linus, that already is refining in Malaysia, is building a plant in Texas.”

Q So, we'll come back in a few minutes, I think, to what are the solutions to this geopolitical challenge that we face, um, but first, just can you walk through the steps from Raw ore mining to a magnet that goes into a motor that goes into a vehicle. Um, what are the steps along that process?

A So it starts with mining. Uh, so you produce, uh, well, you, you mine the ore. Uh, again, majority of that happens in China. Uh, to some extent that happens in California as well, uh, by MP materials. The next step is to take the ore, which has only one or two percent rarest element in it, sometimes even less than that, to a product that is called concentrate. Now concentrate usually has 50, 60% rarest oxide value in it, and, uh, that also is quite a bit produced in China and a little bit outside China as well. Now, uh, Majority of concentrates now are being shipped to China. When it comes to processing now, give or take, 90% of concentrates are processed in China. In this process, basically, you take the concentrate and with very heavy chemical process, drive it all the way to now called mixed rare earth oxide, which is a basket of rare earth elements that comes off as a final product from the concentrate. Now, mixed red airs oxide Really depends. The quality of mixed rarest oxide in each plant, or each deposit, will depend on the ore that they process. For instance, for, for the material from California that is shipped to China, usually you end up with about 70 to 80% of lanthanum and cerium oxide. Those are the metals that don't carry much value. Uh, and, and this number will be different in other Mixed earth oxides that come off other deposits, but universally, 7080, 85% of…

AI assessment note: “drive it all the way to now called mixed rare earth oxide”

Q really need the rare earth elements? Can we displace them with something else? We'll focus probably on this permanent magnet thing, because that is, that's the most relevant to the energy transition. As you said, it's where the vast majority of the dollar value is. Why is it that this basket of rare earth elements makes permanent magnets so much stronger? Like, what is it about them that enables that?

A Oh, it's their, Physical and chemical properties. So, uh, uh, when you, it happens that when you combine, uh, neodymium, presodymium, with iron and boron, uh, with very specific physical properties that they have and they carry, you end up with really strong magnets, uh, that has significant energy density in a small volume. And that is the differentiator of these type of magnets versus magnets versus other magnets. Magnets in the market. And, and, and, uh, we count on this property of rarest permanent magnets significantly in the energy transition. Uh, simply put, those permanent magnets now from the application side, we, one of the areas that we use them very often is when we want to convert, uh, chemical, uh, electrical energy into, uh, mechanical energy from a battery to driving a car. Or the other way around, from mechanical energy To electrical energy in a wind turbine generator. So when we use rare earth permanent magnets, we happen to make the most efficient electric motors or generators out there that we know of. And if you're putting a lot of dollars into a battery pack in an EV, it just makes sense to tie it up to a very efficient electric motor and consume that electricity efficiently. And when you think of systems, Then using permanent magnet electric motors becomes really, uh, important.

AI assessment note: “when you combine neodymium, presodymium, with iron and boron... you end up with really strong magnets”