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
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
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
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
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
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.
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
[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
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.