Russian ICT group to enlarge monazite concentrate sales to China

Asian Metal: Hello, Ruslan! Thank you for accepting this interview from Asian Metal. Could you please introduce your company and your main business briefly?

Ruslan: Russian RedZem Technology LLC is one subsidiary company of Russian ICT group which engages in mining and processing rare metals and precious metals materials in Russian. With its head office located in Moscow, Russian RedZem Techology mainly deals with the Monazite concentrate mined in the former Soviet Union. Our company ever planned to process monazite concentrate in Russian, but users from China have become more and more interested in our products in recent years, so we are also considering the possibility of cooperation with Chinese customers.

Asian Metal: Thank you for your introduction. Would you please give us a brief introduction of your career?

Ruslan: In order to promote cooperation internationally, our company invited me to be the Head of International Trade Division in 2016. My work has always been closely related to China, which is a leading country in the international rare earth industry, including the processing of monazite concentrate. The main objective of my work is to establish and promote long-term cooperation with foreign users. In addition, my responsibilities include detailed market analysis, market research, business negotiation, business and technical cooperation, solving the follow-up problems of international business cooperation, signing foreign trade contracts and implementing agreements with international partners.

Asian Metal: According to the investigation of Asian Metal, Chinese mixed rare earth chloride mainstream prices declined to current RMB30,000-31,000/t (USD4,261-4,403/t) EXW D/P, down by about RMB1,000/t (USD142/t) compared with those before the Chinese Spring Festival holiday. However, the mainstream prices of Chinese recycled monazite concentrate (TREO=60%) stayed stable at RMB23,000-24,000/t (USD3,267-3,409/t) all the whole year through 2019. Do you think that the prices of mixed rare earth chloride and monazite concentrate should fluctuate with PrNd oxide prices? Why?

Ruslan: In my opinion, the dropping prices and weakening demand for rare earth raw materials and products mainly depend on the instability and economic downturn of the overall global economic environment. According to the law of economy, the factors that affect rare earth product prices, such as praseodymium oxide and neodymium oxide, is not only the market supply and demand, but also the production costs of rare earth concentrate, such as monazite concentrate.

It is noteworthy that monazite concentrate, which is naturally radioactive, is actually a rare earth rare material that classifies into one of seven dangerous goods. As its production costs and freights are high, so it is likely that suppliers would be unwilling to supply when the economy stays in a slump. As for import of monazite concentrate, foreign suppliers have the confidence to wait until market conditions improve or fully recover.

Another major reason is the lacking or insufficient supply of raw materials, which is affected by many factors, such as limited production capacity or export prohibition by exporting countries. Based on above reasons, the prices of imported monazite concentrate and mixed rare earth chloride in the international market do not directly depend on the prices of praseodymium oxide and neodymium oxide in the market.

Asian Metal: As you know, what is the current price of recycled monazite concentrate (TREO=60%) in the international market? Why is there a big price gap between the Chinese and international market?

Ruslan: For my point of view, the cost of monazite concentrate imported to China mainly depends on the TREO content, logistic costs and the import paths, and the paths can be simply clarified to into "legal" and "grey". Based on my market research, I am sure that the cost differences between "legal" and "grey" imported monazite concentrates are 20-25%. These factors are exactly equivalent to the price difference between China's domestic byproducts and imported monazite concentrate. At present, the price of monazite concentrate in the international market defines the China's import price. For example, Chinese imported monazite concentrate prices (TREO=57-59%) in February 2020, hovered at USD2,900-3,650/t (measured by the imported quantity of 108-420 tons).

Asian Metal: With economy growing up, China government is stepping up its regulation and inspection on environmental protection. It was explicitly stated in both 2012 and 2016 versions of "Rare Earth Industry Access Conditions" that "China prohibited the separation of single monazite concentrate". What do you know about China's domestic and import policies regarding the comprehensive recovery and utilization of monazite concentrate? What do you think about this?

Ruslan: I've heard about China's comprehensive processing and import control policy for monazite concentrate since 2018. At that time, when we were discussing cooperation with a partner in China, we strictly followed the international laws and Chinese laws concerning the supply of monazite concentrate. From my side, the comprehensive processing policy for monazite concentrates includes not only the separation of monazite concentrate and the production of mixed rare earth chloride, but also the further treatment of radioactive tailings containing thorium and uranium, aiming to meet the unified and reasonable requirements of the Chinese government environmental protection reform. The policy focuses on regulation of "illegal processing" and "grey imports", addressing environmental pollution of radioactive waste, increasing the responsibility of business owners for environmental protection laws and finally achieving the goal of improving domestic environmental conditions.

Asian Metal: China National Nuclear Corporation (CNNC) Huachuang Rare Materials Co., Ltd., with an annual production capacity of 17,000t mixed rare earth chloride, had a trial production of processing monazite concentrate in mid-December of 2019, which marks the beginning of the comprehensive recovery and utilization of monazite resources in China. How do you think this event will affect and change?

Ruslan: The Hunan monazite concentrate comprehensive recovery and utilization project has important implications for the entire rare earth industry and Chinese government's environmental protection reforms. In my opinion, the monazite concentrate processing project of CNNC Huachuang Rare Materials Co., Ltd. aims at the centralized recovery and processing of monazite concentrate, the production of mixed rare earth chloride and the recycling and processing of monazite concentrate residual radioactive waste, and the centralized procurement of monazite raw materials in the domestic and international markets. To be sure, the comprehensive utilization project of monazite concentrate and the simultaneous improvement of "rare earth industry" legislation will not only bring tangible economic benefits to the country, but also be an effective protection measure against environmental pollution caused by radioactive substances.

Asian Metal: Can you share us the detailed conditions of capacity, output and inventory for your company. What's the TREO content of your product?

Ruslan: Our company already stored more than 82,000t of monazite concentrate in central Russia. I want to note that our company is not a pure monazite concentrate maunfacturer and we have monazite concentrate inventory stored in the former Soviet Union, during which we packed the monazite concentrate in wooden cases weighing 50kg net.

According to the International Atomic Energy Agency's laws and regulations, as well as the relevant standards of Russia and China, the monazite concentrate needs to be transported by the IP-1 industrial cargo package. Therefore, in order to comply with the laws of Russia and China and facilitate the supply of monazite concentrate to China, we need to change the packing of wooden cases into two-ton bulk bags. Currently, the replacement packaging capacity is 1,200 tons per month. Under the condition of supplementary supply confirmation, we can increase the replacement packaging capacity by two times.

As for the quality of our rare earth materials, according to the sample test results of monazite concentrate stored in our storage base, the TREO content stays in the range of 55-60%, which fully conforms to the monazite concentrate quality standard of China XB/T 103-2010.

Asian Metal: Thanks, can you briefly introduce us the exploitation of monazite concentrate and other rare earth concentrate in Russia. If Chinese rare earth enterprises are interested in your rare earth products, what kind of business model would you consider?

Ruslan: I learned that they key rare earth mining project in Russia is ThreeArc Mining, which develops and explore the TAMTOR rare earth deposit in Yakutsk, and the company belongs to ICT group. The next rare earth project would be directly operated by Russian RedZem Technology LLC. Now we hold the biggest monazite concentrate stocks, with around 47,000t of REO.

About the cooperation models with Chinese partners, we are committed to the long-term cooperation in the international trade field. Our company's production and logistic infrastructure have been 100% ready and other preparatory work has been completed. Besides, our high quality products have been recognized by Russian and Chinese laboratories. In a word, we can supply the monazite concentrate to Chinese users in the shortest time.

Asian Metal: It is reported by public media that Russian ICT group successfully signed a long term contract with Yongzhou Lingling Yuanda New Materials Co., Ltd. , which appointed to import around 12,000t monazite concentrate from your group. In the past two years, what is the progress of your cooperation? Are there any further cooperation plans with Chinese companies in the future?

Ruslan: After signing the contract with Yongzhou Lingling Yuanda New Material Co., Ltd., we started the first stage of the preparation work. The main aim of the preparatory work is to establish a "legitimate" cooperation model that both conforms to Russian and Chinese laws and regulations. During this period, we fully studied the international transportation of monazite concentrate, the customs requirements, and the safety transportation requirements of radioactive materials stipulated by Chinese law. In addition, our company is certified as an IP-1 industrial package for monazite concentrate transportation. Our partner, Yongzhou Lingling Yuanda New Materials Co., Ltd. also made corresponding preparations, obtained the official import license from the competent authorities, and drew a detailed road map from the reception, customs clearance and delivery of monazite concentrate to the destination. At present, the main preparatory work has been completed and the first batch of monazite concentrate is ready for shipment. Soon, we can start the second phase of our cooperation---supply.

Regarding our next plan, we will actively carry out extensive cooperation with all customers in China. We hope to establish "Win-win" cooperative relations with our Chinese partners and make significant contributions to the development of the rare earth industry in the two countries.

Asian Metal: Would you like to share us some feelings on the international trade?

Ruslan: I have been engaged in international trade since 2007, specializing in the export of raw materials from Russia to China. During this period, I made a variety of products, including synthetic rubber, butanol, butyl acetate, acetone, wood pulp and other raw materials. My Chinese partners include private owners and state-owned enterprises, specialized trading companies and end users.

Sometimes there are all kinds of differences and unexpected special situations in our cooperation with Chinese clients, but based on mutual respect, good reputation and rich professional experience, we can always find a way to solve these problems. Based on my experience with Chinese partners, I can surely say that Chinese buyers are the best and most reputable partners.

Asian Metal: Thanks, Ruslan! Asian Metal will carry your vision to provide the objective, professional and authoritative market information for the industry. Thanks again for your support and sharing! Wish you every success in your business!

Ruslan: Thanks you for offering me this opportunity to introduce our company and share opinions on related issues.