TMRC - Ucore CEO: US Should Back Multiple Rare Earths Players

The CEO of rare earths exploration and development company Ucore Rare Metals (TSXV:UCU,OTC:UURAF) says the the US Government should avoid putting all its eggs in one basket when it comes to developing a domestic rare earths supply chain.

Speaking with the Investing News Network, Jim McKenzie said that given the list of viable rare earths companies outside of China was a short one, it was important for the US Government to “spread its financing around amongst the few players that are resilient,” in response to news that the US Army was seeking submissions from rare earths companies and was looking to write checks for domestic producers to get to work.

“I think there could be a winners circle — it would be a small winners circle, but it should be a winners circle at the end of the day,” said McKenzie.

The US Army’s request for submissions had originally had a deadline of December 16, but it was extended to December 23 last week.

Rare earths are a critical component in military weapons, from guidance systems in missiles to smart bombs and jet fighters, and the fact that the Chinese currently control the vast majority of production and processing globally has the US Government seeking other sources.

“I know that the US is spending a lot of time and energy and finances looking for alternatives, and what we’re emphasizing to the administration and the DoD (Department of Defense) and others is that we don’t believe that US federal government or DoD or the army should back any one player,” said McKenzie, whose company Ucore is developing the Bokan Mountain heavy rare earth project in Alaska.

Ucore has indicated that it will be making a submission to the US Army on rare earth processing, and McKenzie said that he believed his company had a “phenomenal proposition for the US,” given the partners it had amassed, saying Ucore was able to meet all the criteria of a viable operation due to its access to feedstock, necessary technology, a downstream supply chain and the required financing.

Even though McKenzie said Ucore was keen, he stressed the point that the US Government should back multiple players out of pragmatism.

“I think it’s advisable for the US to spread the dollars around … there’s only a small list of players at this time anyway and I think you should foster the few that have made it this far,” he said.

By “survive,” McKenzie was referring to the rush into rare earths following China’s decision to throttle exports to Japan in 2010 over a fisheries dispute, and the later decision by China to return to full exports thereby smothering what was a burgeoning junior rare earths market.

“I think to have survived the ups and downs of the rare earths space and to continue to raise capital and garner support you have to have an extremely compelling story to have made it this far.”

Another rare earths company, Texas Mineral Resources (OTCQB:TMRC) also indicated that it would be making a submission before the deadline, with its CEO Anthony Marchese telling INN that the invitation to apply was proof that the US was finally getting serious about securing the rare earths supply chain.

“It’s study after study, and we’re at the point now where we need to get beyond studying the issue, and actually put some real money to work,” Marchese said last week, who added that given that the US Army said its funding was open-ended, there was indeed the potential for multiple projects to be backed.

McKenzie had sentiments along the same line, saying that for rare earths explorers and developers, this was an opportunity for vindication after many years of tough going.

“We’re not looking for handouts, we’re looking for the legitimacy of having the US government say that these guys can pull this off.”

Marchese’s company along with its partner USA Rare Earth were out and running earlier this week with news they would be beginning the development of a Colorado-based rare earth and critical mineral pilot plant on December 16 — clearly with or without US Government funding.

Vivas Kumar, a principle consultant at Benchmark Mineral Intelligence, told INN that the news the US Army was looking for projects to invest in showed that “when the USA sees a national security or defense need for investing in raw material supply to reduce significant foreign dependence, the investment will happen.”

He added that speed was of the essence however, given the time it takes for projects to come to fruition, “this kind of investment really needed to happen sooner,” he warned.

Kumar noted that rare earths were far from unique as a complex resource that America lacked adequate supply chains for, saying that more money was desperately needed throughout the critical minerals supply chain.

“With lithium-ion battery applications’ demand growing at double-digit percentage year over year, the domestic lithium-ion battery supply chain remains tremendously underinvested. The national security implications of building this supply chain are clearly manifesting as Chinese companies continue to significantly build-up global battery chemicals capacity and lock up underlying resources,” he said.

“A similar effort from the US Government to secure lithium, nickel, cobalt, and graphite supply would be welcomed, and is needed to ensure American industrial competitiveness.”

Shares in rare earths-focused companies have responded to the US Army’s move, with Ucore enjoying a 50-percent increase in value on the TSXV through last week as it climbed to C$0.165 – though it did peak at C$0.19 at one point.

The Australian producer — and the only major producer outside of China — Lynas (ASX:LYC,OTC Pink:LYSCF) has enjoyed a similar bump, with its shares on the ASX going from AU$2.07 to AU$2.57 over last week. Lynas for its part has been pushing forward with rare earths processing in Australia, and is reported to be making a submission to the US Army as well.

On December 17, Ucore was trading at C$0.145.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.