Mark Smith: Why Rare Earth Metals Matter

May 15, 2009


Vulcan: From a purely practical point of view, and from an extractive point of view, what would you say are the major difficulties in extracting the rare earths? We've heard about the fact that there is usually thorium - is that correct? - mixed up with them, which is radioactive, and people don't terribly like that. As a mining man, you have a rare earth facility, or you have a rare earth site. What are the greatest challenges in getting those rare earths out and providing them to your customers in a form that they can use?

Smith: Keep in mind that we have all the infrastructure in place, so that's not a concern, and we have one of the richest rare earth deposits in the world, so grade is not an issue for us. I think our greatest challenge is trying to maximize the recovery of the rare earths once we take them out of the ground and before we send products to the customer. Historically, this industry has only been able to achieve a 50 or 60% recovery. This means that when you pull a pound of rare earths out of the ground in the form of ore, you may only be getting half a pound that you can sell at the end of the day.

We are absolutely committed to continuing to develop our process technology, and our goal is to be up in the 90%-plus recovery rate. Hence when we pull a pound of rare earths out of the ground in the form of ore, we're going to be selling 90% or more of those rare earths to the customers. That results in a whole bunch of positive things for us. It minimizes the footprint of the mine, minimizes water use, and minimizes energy use. These are the right things to do in our business.

We firmly believe that you can have a well-run mine that is environmentally superior and have rare earth products at the same time. As a company, we are absolutely committed to a well-balanced operation. As an example, we're using approximately 75% less water today to produce the same amount of materials, on a unit basis, than we did 20 years ago.

These are the things we are concentrating on. Indeed, the large capital project we're talking about to refurbish and retool Mountain Pass currently includes over a third of the money being dedicated to water conservation and doing the right thing environmentally, so we are truly a sustainable operation.

Vulcan: If you're an investor and you're excited, as I think you should be, by the rare earths story, how can you get an exposure to rare earths, not least because you're a private company?

Smith: That's correct; we are a U.S.-based group of private investors that purchased this facility and all of its assets from Chevron Corporation. We have every intention at the right time of going public with the company. However, I think we want to watch the markets and make sure we time things right. For example, two months ago might not have been an ideal time to do an IPO.

Vulcan: Mark, thank you.

Smith: Thank you.


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