Mr. Kennedy works closely with the Thorium
Energy Alliance to promote US legislation
for the commercial development of thorium
energy systems and rare earths.
Thank you, Brad.
The title of the paper is "Creating a Multinational
Platform, Thorium Energy and Rare Earth Value
Chain - a Global Imbalance in the Rare Earth
Market."
The rare earth imbalance is largely the result
of regulations with unintended consequences,
like they always are.
Rare earths and thorium have become linked
at the mineralogical and geopolitical level.
Regulatory changes pertaining to thorium contributed
to the excess market concentrations in rare
earths.
This has resulted in economic dislocation
and national security concerns for many countries,
and a solution is required.
The rare earths people frequently say there
are 17.
Promethium doesn't exist in the earth's crust,
so we'll leave it out of the discussion.
Thorium is a companion element to rare earths.
There is a high correlation between heavy
rare earths and thorium.
Generally speaking, when you are mining the
much more valuable suite of heavy rare earths,
you're getting a lot of thorium.
Monazite was originally not mined for its
rare earth.
It was mined for the thorium, and the thorium
was used to make gas mantles.
It was the original high efficiency lighting
source back in the late 1800s, early 1900s.
Monazite was the primary source of rare earths
all the way through to about 1964.
What's interesting about monazites, in most
cases, they're a byproduct of some other form
of mining a commercial commodity.
When you're mining rutile or titanium or zirconium,
the monazite is a tag-along product, and it
separates out quite easily by gravity.
Consequently, when you are mining for these
materials, you got your monazite for free,
basically.
If you look at the first decade and a half
of the rare earth industry, you can see that
the United States was a dominant supplier.
Brazil was a large supplier.
China actually tried to enter the market,
and they couldn't meet Western standards so
they weren't able to pursue it.
At this time, monazites represented close
to 100 percent of the world's heavy rare earths.
In the mid '80s, the NRC and the IAEA made
some classification changes that dealt with
thorium.
Basically, make monazites fall into the category
of source material.
Because of that, no one really wanted to manage
the material any more.
Refineries didn't want to accept monazite
because they didn't know what to do with the
residue or residual thorium.
Just prior to this classification changes,
monazite represented about 50 percent of the
world's rare earth supply.
Remember this is a byproduct.
This is something that was a very low- or
no-cost byproduct of some other mining.
China's market advantage evolved from NRC/IAEA
resource classification changes.
They basically pulled monazite out of the
value chain and China stepped in and took
advantage of this.
China also implemented an aggressive top-down
industrial policy, which I think was very
wise.
The corresponding moments of classification
change, China implementing well-known industrial
policy programs 863 and 973, China, at the
highest levels of government decided that
the rare earth industry was critically important,
and they intended to dominate that market.
Their aggressive entrance into the market,
the inability of Western producers to utilize
high-value, heavy, rare earth monazites caused
most of the companies that were mining these
resources to exit the industry.
It's interesting to note that the one rare
earth mine that you can see here in blue was
eventually shut down, not for competitive
reasons or costing reasons.
It was shut down because they had a thorium
discharge from their tailings pipe.
The EPA and environmental groups put enough
pressure on them.
They eventually shut down.
Fast forward to today.
The United States and Australia, just two
companies alone have invested well over $6
billion into new rare earth projects.
If you were going to look at their financial
situation, it doesn't look good.
It's quite dire.
Being from the United States and dealing with
the legislative process over there, we have
to always speak of things in free market principles.
Is this a free market failure or is it something
else?
This needs to be considered.
To avoid liabilities, US and global financial
markets favored rare earth projects with low
thorium content, not high-value rare earth
distributions.
This is the largest rare earth mine operating
in the United States.
I want to point out that this is only half
of the rare earth elements.
This is the lighter-value, lower-value portion.
The only heavy rare earth that they claim
to be able to produce is almost invisible
right there in that little sliver.
These deposits come with a cost.
The cost is they don't contain the heavy rare
earths critical to accompany survival in a
very competitive industry.
By the way, the Australian company's rare
earth distribution looks very similar.
It is a little bit better than this, in terms
heavy rare earths, but it's basically the
same thing.
This is the economic rare earths that are
needed if you want to be part of any modern
economy.
This is what's being mined today by Western
companies trying to avoid thorium.
There is a disparity.
I hope you can see that.
The United States, very market-oriented, balanced
its short-term return goals against the cost
of developing its own value chain for what's
just low-value rare earths.
This dictated that the company actually make
investments inside China, and it's integrated
itself inside China.
They send all of these materials right here
to China for processing.
These are very low-value materials that sell
at or below cost.
Finally, they're taking all the thorium and
cementing it in place.
The Australians chose to establish their own
rare-earth refinery inside Malaysia, hoping
to get around the source material issue.
That didn't work out for them very well.
They spent about a year fighting the government
over thorium issues.
They did have, I thought, an honorable approach
to it all by integrating themselves into the
OEMs and end-users.
Unfortunately, the cost of shipping ore from
Australia to Malaysia, then processing it,
not being able to go all the way up the value
chain -- it's a pretty truncated refinery
system -- and then ultimately not having the
heavy rare earths, this company's having tremendous
trouble also.
Today both companies are facing unsustainable
losses and eventual bankruptcy resulting from
large-scale production of low-value rare earths
that greatly undermine the marketing of all
light rare earths.
If you go back and look at that truncated
list of elements, they produce a tremendous
amount of those.
To get past the losses, they keep producing
more and more, in hopes of eventually breaking
even.
It's the old saying, "We're losing money on
every unit, but we're going to make it up
on volume."
It's not really working out.
Another problem is the high cost of direct
mining.
I want you all to consider that 70 percent
of China's rare earths come from the byproduct
production from an iron ore mine.
China very heavily utilizes byproduct, co-product
production to keep their cost down.
Both of these mines are single-commodity,
source-dependent.
Unfortunately for them, the distribution of
those commodities are on the low-value, light
side of the equation.
These enterprises have much higher capital
costs than traditional mining ventures.
Traditional mining ventures do not get into
refining.
This leads to a huge disadvantage for individual
mines, always starved for capital, trying
to build the entire fully integrated value
system.
It's just too costly.
This leaves China with absolute control of
the high-value heavy rare earth market.
They can enjoy the profits in that market
without any competition.
Full-value rare earth production, in a fully
integrated value chain is what you need to
survive.
We've learned or seen that developing low-value
rare earth deposits with high direct costs
is not economically viable.
But, high-value, low-cost byproduct resources
are abundant and they're available.
In the United States alone, thorium-bearing
rare earth phosphates and other thorium-bearing
mineralizations could easily meet 50 percent
of world demand for rare earths, if they could
just get back into the value chain.
What I'm saying is there's no need to develop
any new rare earth mining operations.
We just need to fix the problem.
These resources are abundant and available.
Every year, mining operations across the United
States and across the world take these valuable
monazites and other thorium-bearing phosphate
rare earths.
They either plow them back into the ground
and blend them in to make sure they meet the
sub .05 threshold for thorium or they a cement
them into tailings, lakes or dispose them
by other processes.
The material is available.
It can be introduced in the value chain.
We just need to come to grips with the thorium
issue.
John Kutsch is the executive director of the
Thorium Energy Alliance.
John and I have spent about six years working
on legislation to fix this problem.
There are two bills in the United States Congress
today that if enacted would create a federally-chartered
multinational rare earth cooperative that's
privately funded and operated, and it would
be authorized to accept monazites and other
thorium-bearing minerals.
It would do this within existing regulations
under the definition of unprocessed and unrefined
ores.
All of the actinides associated with this
ore would pass to another federally-chartered,
what we call thorium bank, to ensure long-term
safe storage and the development of future
use.
Here's what the rare earth cooperative will
look like.
These are lots of existing mines that throw
away rare earths today.
They can't bring it to market.
By creating these two entities, this material
could flow straight through and it would be
owned by multinationals.
It would be owned by governments that were
interested in making sure that their industries
had a secure source to rare earths.
All the thorium liability would be passed
over to what we call the thorium bank, and
this thorium bank would be given congressional
authority to develop uses in markets for thorium
including energy.
The bill also establishes the multinational
platform for the creation of a thorium bank
that'll take all of this liability.
The creation of the Thorium Industrial Products
Corporation is authorized to develop industrial
uses and markets for thorium including alloys,
catalysts, medical isotopes, and other uses.
The same corporation would also be authorized
to develop thorium energy systems that include
solid fuels, MOX fuels, solid fuel reactor
technology, beam/accelerator-driven technology,
and liquid fuel reactor technology.
Liquid fuel reactors carry a re-circulating
load and burns down the actinides.
The liquid fuel reactor component would also
look into electric, thermal, synthetic, desalination,
and even nuclear waste reduction.
A liquid fuel reactor has the ability to basically
burn down actinides, and you could develop
these reactors to consume much of the spent
fuel around the globe and produce energy and
heat from it.
Very useful.
This is what that would look like, the thorium
bank with its various missions.
Both of these entities would be open to international
investment.
Any IAEA member state, any government agency,
or any true end user or producer of rare earths
or energy could invest into these entities.
I know this is probably the wrong form to
ever say anything like this but I want you
to really think about this statement.
No technologically important and widespread
industry ever began inside a regulated environment.
You really can't find a real-world example.
The current environment demands conformity
to a standard paradigm, so the point of the
Thorium Corporation is to create an unrestrained
R&D platform for all member states to participate
in the commercially-developed next-generation
technology.
Look, it's evolution or revolution.
Some nations are opting out of the traditional
light water, solid fuel technology paradigm,
and it's going to happen.
The Chinese government is very aggressively
developing liquid fuel technology, and so
is India.
If there's a single developer, there's a single
winner.
The legislation here proposes a multinational
platform where all members and participants
could be winners.
It's about working together and sharing the
rewards.
Thank you very much.
[applause]
That's very challenging and intriguing proposition.
The first question to ask before open to the
floor is, what is the probability of this
bill being approved in the United States Congress?
That's a good question.
I can't give it a percentage.
It's certainly possible.
There are national security concerns inside
the United States relative to rare earths
and the defense industry that are very strong
and very deep.
That is the driver behind the legislation.
In another time, in another topic, I could
show you that the United States, its entire
US military is 100 percent dependent on China
for rare earth materials and components.
That is the driver behind the legislation.
We feel like we've got some leverage there.
Thank you.
It's open to discussion.
Frank Harris, Rio Tinto in Australia.
The thorium bank is a fascinating concept
but I wonder, have you done the work behind
what the potential uses of thorium is in volume
and weight percentages?
As it goes, how much will be produced?
To me, it seemed like there are a lot of extremely
small quantity applications in there which
wouldn't even begin to account for the amount
of thorium you would have going and you end
up with this massive bank with no one taking
any money out.
That's exactly right and that's why we push
so hard for the commercial development of
thorium-based energy.
If the bill passes, you would be able to develop
MOX fuels which would use a reasonable amount
of thorium.
But ultimately, to utilize that much thorium,
you would need to roll out a thorium liquid
fuel reactor economy on a global scale.
If you want to look at it in a different way,
you'll never have to mind thorium or directly
mind rare earths and you'll have all of the
rare earths you need and all of the energy
you need.
[inaudible 17:31] of France.
Just about the concept of the thorium bank
is a good idea but it's in your proposal bills
for the new legislations?
The Congress will take into account that this
bank will stay for only a few decades before
to supply rallies the market that's been...you
have to put the annual legislation of finance
during a few decades result any benefits.
That's a good point.
The production of rare earths, there would
be a small fee.
Let's say it's five cents a kilogram, and
that would pay for the long-term storage of
thorium.
There's really nothing to storing the thorium.
There would be almost no cost.
You would basically have seismically, hermetically
sealed buildings, and you'd put the material
in a container, and you'd draw off the radon
as it came off, and then let it decay to lead.
There would be no radio emissions from the
building.
Nobody ever needs to go into it.
It's really very, very low cost.
You could store about 50 years worth of thorium
in a building about a third the size of this.
Yes, there's some cost, but they're totally
reasonable.
What's the cost of the United States, Japan,
Korea, and Europe continuing to lose technology
industries to China because they're concerned
about a guaranteed supply for rare earths?
I'd say that's pretty high cost.
One of the propositions of the generation
for reactors is that you mostly run into the
300 megawatts to 150 megawatts category.
Not in the thousands, or thousand-something
category that we have today.
That's an excellent point.
The difference between these reactors and
PWRs, LWRs, once you have an approved design,
you could basically build these on an assembly
line.
Just like an aircraft, when the aircraft gets
to the end of the assembly line, it is a permitted
unit ready to go into the field.
You would have sight requirements, but if
you were moving these initially onto the campuses
of existing reactor sites, it would be a very,
very quick and easy process.
Alvin Weinberg, the man who held some of the
original patents to the light-water reactor,
invented these liquid fuel reactors in the
'50s as they were building the first of three
that they operated at Oak Ridge.
He said, "It's so simple, all I need are my
three p's, a pipe, a pot, and a pump."
That's it.
All of the safety features are a hundred percent
passive, so they're very, very different than
traditional light-water reactor.
Thank you very much.
As we see there is no problem, the shortage
of energy, the future, at least regarding
sources.
