In discussions and presentations on rare earths and their extraction and processing, junior mining and exploration companies are frequently asked to discuss how they plan to handle and “dispose” of any thorium present in the deposit [especially if the deposit contains monazite]. The presence of thorium in such deposits is usually perceived to be at best a nuisance and at worse, a potentially costly regulatory problem, because of its slightly radioactive nature.

And yet, it wasn’t always the case that thorium was perceived to be a problem. Many of the rare earth deposits known today, were discovered by geologists and others looking for either uranium or thorium-bearing minerals. Former thorium-producing mines are now being re-examined and re-vamped as rare earth mines.

Thorium was at one time the subject of significant research as part of the development of nuclear fuel cycles. It ultimately lost out to uranium as the metal of choice for such processes, primarily because the uranium fuel cycle was particularly suited to the production of materials for use in weapons manufacture. Thus the decline in interest was a result of political, not technical reasons.

In recent years, however, there has been a resurgence of interest in the use of thorium for a modernized version of the nuclear fuel cycle. According to the Thorium Energy Amplifier Association [ThorEA], there are a number of reasons for this:

• Thorium is over three times more plentiful than uranium and the process of extracting it from minerals is relatively straightforward;
• Thorium has a higher energy density than uranium. According to ThorEA, there is enough energy in 5,000 tonnes of thorium to provide total global energy needs for one year;
• Fuel cycles that use thorium are inherently proliferation-resistant [ironically the very reason why thorium fell out of favor with the industrial-military complex decades ago], with negligible plutonium production;
• Such fuel cycles have better nuclear characteristics, better radiation stability and longer fuel cycles than uranium fuels;
• It is possible to use thorium fuel cycles to effectively destroy legacy plutonium and other nuclear waste products.

A number of systems have been proposed in order to develop a thorium fuel cycle. A couple of weeks ago, ThorEA published a report on one such concept – the Accelerator Driven Subcritical Reactor of ADSR. Without getting bogged down in the details, an ADSR system couples a nuclear reactor core with a high energy proton accelerator. While not a new concept, the ThorEA report revisits the concept and analyzes the feasibility of such a system as a means of generating electricity.

If, realistically, nuclear power generation has to remain a central plank of any future energy development program to either reduce carbon dioxide emissions or the burning of fossil fuels, it seems to me that the advantages of a thorium-based fuel cycle significantly outweigh those associated with uranium-based systems. While certainly a long term project, developing such cycles would also simultaneously provide a destination and future customers for the thorium currently discarded as a waste product of the rare earth extraction process. Surely a win-win for all concerned?

You can download a copy of the ThorEA report from here – well worth a look.

Last weekend I listened to an audio clip broadcast on Australia’s ABC Radio National, and I think, if you have an interest in investing in the development of rare earth supply chain dynamics, you should also listen to it. You can listen to the show via the clip below:

Rare Earth Metals - Nov 14, 2009

I’m certain that the above clip was edited out from another, 45 minute show that also ran on ABC Radio National’s Background Briefing program over the weekend, and was a good survey of the current issues in the market fundamentals (i.e. the current supply and demand situation) of the rare earth metals. You can listen to the show via the clip below:

Rare Earths and China - Nov 15, 2009

The first clip cited above, helped me to understand why the Chinese mining industry is interested in the Australian miner, Arafura Resources, which I do not mention in my surveys because, although it is one of the very few “listed” companies with a rare earths deposit (known as Nolan’s Bore), it is, to the best of my understanding, not ready to go forward due to open issues with its “metallurgy.” This is the term used in mining to describe the chemical engineering processes needed, to economically extract the desired minerals from the mined ore concentrates, and then to separate them into their constituent elements in a form in which they can be further processed to usable materials. The main issue is always economics. The metallurgy must finally result in products that will sell for more at that point, than they cost to produce. It is very important to note that an environmental issue can have an economic impact on a project, that makes the ultimate material cost prohibitive, even if the chemical processes involved do not on their own make the costs prohibitive.

This comes out strongly in both of the clips above as the Lynas Chairman, Mr. Nick Curtis, alludes to the problems caused for Arafura Resources by the fact that their Nolan’s Bore ore body contains both of the naturally radioactive elements, uranium and thorium.

An environmental commentator then uses inflammatory words such as “dirty” and “dangerous” to describe what he calls the historical mining of the rare earths (anywhere), through their extraction from formations known to geologists as monazite mineral sands, in which, as Mr. Curtis points out correctly, thorium is always found along with the rare earths.

The commentator goes on to tell us that the citizenry of Darwin, Australia is “concerned” with a plan by Arafura Resources to “dump” rare earth processing residues from Nolan’s Bore containing “yellowcake: ( a common name for the yellow uranium oxide U3O8-containing ore known as carnotite when found alone) on an island in Darwin Harbor. He doesn’t mention, or if he does, I didn’t note it, the final destination of the thorium from the Nolan’s Bore operations.

I’d like to point out to my readers that I didn’t know of the Darwin island scheme or that the radioactive residues were such an issue, until I heard the ABC commentator and Mr. Curtis’ comments during the last two days, but I must admit that I take a different view from theirs.

Perspective is the key to objectivity. So, what is the Chinese perspective on all of this?

China is very interested in uranium for current use and in thorium for future use in nuclear reactors to produce electricity for civilian use without the need to burn fossil fuels. In addition China seeks uranium for its military programs. China last year instructed its domestic rare earth processing plants to hold all thorium produced as a byproduct for government use. This has always been the requirement in China for any uranium produced anywhere.

I’m certain that the current Chinese minority shareholder in Arafura Resources would be willing to buy and export to China all of the uranium or thorium produced in Australia by Arafura Resources (or anyone else) at market price.

I am not confusing China and Chinese mining companies here; they are one and the same with regard to their primary focus on growing China’s economy. I do not see any need to name individual Chinese entities at this point in the discussion.

Mr. Curtis and well known Australian rare earth expert, Dudley Kingsnorth, who once worked for Lynas, both point out that Australian monazite deposits were the source of 25% of the world’s rare earths in the 1970s and 1980s and that the thorium (and uranium?) contained in them caused their then refiner, France’s Rhodia, SA, to ultimately transfer their processing where possible to China, where it was said on the program that environmental controls were less stringent.

What was not said, was that until the Lynas refinery being built in Malaysia is ready – in perhaps 2-3 years – any ore concentrates produced in Australia by anyon,e will have to go to China also, even those produced by Lynas, should anyone want to refine them. Mr. Curtis indicated that Lynas’ ore does not contain thorium. What he failed to note was that even if it does contain thorium and uranium, those elements will be recovered either in China or in Malaysia.

What also was not said by anyone on the show, was that neither of the Australian deposits has significant amounts of the higher atomic numbered rare earths, dysprosium, terbium, or europium. Interestingly enough, the show mentioned those rare earth elements frequently, but failed to mention that they are not present in Australian deposits in any significant amount. The “heavies” come only from China today, but I think they will soon be coming from Canada, the U.S. and the Republic of South Africa.

I’m going to discuss the topic of the relative importance and the relative value of rare earth deposits in a lengthy article to appear here at The Jack Lifton Report next week, after I discuss “who’s going to win the race to be the first to produce the heavy rare earths outside of China?” this coming weekend, November 22, at the Hard Assets Conference in San Francisco. Come by and talk to me at the expert round table there or, if you can’t, be sure to catch the article here next Monday.

The linkage of the rare earths, thorium, and uranium needs to be taken into account by those who are looking to produce rare earths or invest in their production.

China is soon (September 2-6, 2009) holding the first public workshop on the utilization of a non-proliferative thorium fuel cycle in civilian nuclear reactors since the late 1960s. Now as in the 1960s, Atomic Energy of Canada’s existing CANDU reactors are being tested, both by AECL and, apparently, by Chinese users of the CANDUs, to see how they would perform if retrofitted to use a thorium fuel cycle. Norway, Russia, and the USA are also looking at thorium fuel cycles and designs for reactors based on them. Some of these studies are continuations of ones that were first performed in the 1960s. The USA, for example, had several experimental thorium fuel cycle utilizing reactors then. China has a substantial amount of thorium produced annually as a byproduct of her global-class rare earth production in the Inner Mongolian Bayan Obo region. China currently imports uranium for her existing and planned new power reactors for civilian use. China would have no import reliance at all for thorium.

The People’s Republic of China (PRC) today produces nearly all of the world’s supply of rare earth metals in the Bayan Obo region of Inner Mongolia.

Simultaneously, and as a natural consequence of this rare earth production, China produces an undisclosed but considerable amount of thorium. Thorium is a naturally-occuring radioactive metal, which is second, in natural materials, to uranium as a choice for fueling nucler reactors producing heat by controlled fission.

Because thorium reactors would not produce (breed) weapons grade plutonium, and, in fact, could use up plutonium by “burning it” to initiate the driving reaction in a thorium reactor, the militaries of all nations have in the past prevailed on their governments not to further the development of “thorium reactors,” so that by the mid 1970s the last experimental ones in use were shut down.

Today there is a need to end proliferation, and to destroy the plutonium from decommissioned weapons. The simple fact is that there is a lot of thorium around, perhaps multiples of the amount of accessible uranium, and there is a current revival of interest in the thorium fuel cycle as a basis for the production of electricity, without the production of greenhouse gases, and as a basis for shipborne nuclear propulsion systems for both civilian and military use.

China is well on the road to the Thorium Renaissance, and this September will host the first conference on that topic open to everyone.

The USA and India have most of the world’s accessible resources of thorium. The USA has in fact the only primary thorium deposit – one in which the principal output of which would be thorium – in the world.

I’m planning to be at the Chinese Thorium Conference; I’ll report to you on what I see and hear.

I have an idea for an item to be placed on the President’s agenda to promote the security, self-sufficiency, economic well being and energy independence of the United States. I have written out the idea in the form of a specific first “bill” of its type to be introduced into the U.S. Congress. Although I have identified a real company and a real national laboratory in the body of the proposed bill, I intend this proposal to be general and for its funding and support to be open to any qualified domestic American mining exploration company and any national laboratory or agency that the Congress may specify to support in the national interest. I would also hope that language could be written to include the mining exploration companies of America’s neighbors and friends as recipients of such support.

I am not a lobbyist, nor do I own any interest in any mining company anywhere. I also do not know any members of the U.S. Congress. Nonetheless, as a concerned private citizen, I hope someone in the Congress or the executive branch of the U.S. Government will read this proposal and come forward to discuss it. I note, also, that I am not a lawyer or a professional legislative draftsman, although I did study legislative drafting nearly 40 years ago while attending the University of Detroit School of Law.

The Critical Metals and Minerals Independence and Security Acts of 2009 - Part I: The Rare Earth Metals and Thorium

Whereas it is necessary at all times to maintain the economic well being and security of the United States, it is therefore necessary to ensure that, whenever and wherever possible, both the civilian and the military industrial bases of the United States have an uninterrupted supply of raw materials, produced as much as possible from domestic primary resources, and be as little reliant, or not be reliant at all, for such raw materials on foreign sources of supply, and

Whereas it has become recognized that many less common metals, for example those known as the rare earths and thorium, and many less common minerals are critical to modern technologies, which means that the technologies cannot be built at all without the use of certain of these less common metals and/or less common minerals, so that as a class these metals and minerals have come to be classed as critical metals and minerals, and

Whereas it is important to the economic and military security of the United States that domestic resources of critical metals and minerals be developed, whenever possible, in quantities that lead to domestic self-sufficiency, and

Whereas it is therefore vital to the economic health, welfare and security of the United States that the metals and minerals critical for its economic well being and military security, which are present within the continental United States, be identified, cataloged as to their practical availability, produced, and stockpiled as rapidly as possible, and

Whereas this means that after the identification of such critical minerals and metals 1) The exploration for them, 2) The development of mining and refining processes for them, and 3) Methods for storing them in useful forms must be supported by the United States Government as a matter of urgent national priority, which means that it is understood that there is a time-based priority for the development of individual critical metals and minerals, as they are not being used in equal proportions simultaneously, so that

Therefore, there is an urgent need for the government of the United States to adopt the prioritization, in time, of the supply of critical metals and minerals both for private industry and for the 21st century military as identified by the National Academies and published in two separate studies: 1) Minerals, Critical Minerals, and the U.S. Economy (2008) and 2) Managing Materials for a Twenty-first Century Military (2008), which publications catalog the metals and their uses that are likely to bring about economic or security crises if their supply is interrupted and which publications include charts showing that the most likely metals and minerals to be interrupted are always those for which the United States relies all or in the most part upon imports from politically unstable or unfriendly foreign nations and further show that such import reliance on politically unstable or unfriendly nations for critical metals and minerals is increasing dramatically.

Therefore, as a starting point based on the results of both of those studies, this act shall identify and encompass the development of domestic resources of the rare earth metals, scandium, yttrium, lanthanum, cerium, praseodymium, neodymium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium and thorium as an urgent priority, and

Therefore, the Congress shall adopt the identification of the domestic resources of the rare earth metals and thorium as located and certified and to be revised and published, in the case of the rare earths, in May 2009, by the USGS, within the data in Rare Earths Statistics and Information, and in the case of thorium already published, as of March 31, 2009, within Thorium Statistics and Information, and

Therefore, Congress shall note in particular that it is identified in the Thorium Statistics and Information, cited above, that the largest known deposit of primary thorium ore in the United States is certified and verified to be within the State of Idaho and is owned by a private company, Thorium Energy Inc., 100% of the ownership of which is held by American citizens. Further, the Congress shall note that said Idaho deposits of thorium are commingled with large deposits of rare earths, the details of which will be noted in the above mentioned update of the Rare Earth Statistics and Information update to be published in May 2009 by the USGS.

In furtherance of the purpose of this act, Congress shall appropriate the initial sum of $500 million to be used to: 1) fund the exploration for new domestic sources of rare earths and thorium, 2) fund the study of the extent of domestic resources of rare earths and thorium already identified by the USGS, 3) fund the development of process technologies for the refining of existing domestic ore bodies of rare earths and thorium, and 4) fund the study of storage technologies, if necessary, for the stockpiling of the most appropriate forms of rare earths and thorium, and to achieve these goals

Congress shall create and additionally fund a center for the study of critical metals and minerals as an adjunct to the National Laboratories, operated by the Nuclear Regulatory Commission, already extant in the State of Idaho and, further, Congress shall mandate that from this time forward any commercial facility built, or upon which construction has begun after the effective date of this act, within the continental United States or its territories by any foreign-owned entity for the processing of domestic American ores for critical metals or minerals of any kind as defined by this act but in particular for the processing of ores and concentrates of rare earths and thorium, as defined in this act, or as identified for the purpose of this act by the POTUS, shall be required to agree to process and to process related and appropriate domestic ores of rare earths and thorium from any domestic American source as a service for which the charge is to be at actual cost, as determined by the Inspector general of the GAO, plus a fair “profit” to be determined by a binding arbitration where the arbitrator has been appointed by the Secretary of the Interior or the Secretary of Defense as the exact situation warrants.

Further, as of the effective date of this act no rare earths or thorium ores, concentrates, or finished goods, or any critical metals or minerals as defined herein shall be exported from the United States by any private entity, domestic or foreign, without a license issued by the Department of the Interior or the Department of Defense, and, further, such licenses shall specify the quantity as well as the type of critical metal or mineral as well as the end-use intended, and

Further, no device intended for military use needing a critical metal or mineral shall, from the date of the passage of this act, be built using an imported critical metal or mineral until it is determined by the Secretary of Defense that no domestic source for the said critical metal or mineral exists, and in the event that such a source exists, but is not developed, the United States shall guarantee the necessary financing of the domestic source for any competent company seeking financing to develop the resource if such development is at all possible and not prohibited under the laws and regulations of the United States.

The New York Times reported yesterday that the world’s oil giants are not convinced by President Obama’s plans to reduce oil consumption.

The energy calculus that drives the creation of alternate sources of electricity is very simple: The world runs on the fuel that delivers the lowest cost per watt. The key problem today with the electrification of cars, by which I mean the change of power trains for private passenger carrying vehicles. from hydrocarbon-burning internal combustion engines (ICEs) to electric drive trains powered by batteries, is the initial cost of batteries that can replace the performance of ICEs.

Lithium-ion batteries, though today they must be hand-made and selected, can be used to manufacture high performance private cars with decent ranges, but the battery for the Tesla, which it is claimed will allow an electric vehicle (EV) to go up to 150 mph and have a range of 300 miles, costs nearly $40,000, and the Tesla equipped with this battery will cost around $125,000 at retail. No one today knows how to make EVs with a range of 300 miles and a top speed over 45 competitively with ICEs.

In the next 41 years, up until 2050, it is conservatively estimated that there will be a market for 4 billion personal passenger carrying vehicles. Even if they were priced at an average of (USD)$15,000 each in today’s dollars, this represents a total of $60 trillion of product. When you factor in fuel and maintenance the total probably comes to $100 trillion dollars. Surely this is the largest of the markets of the future, except perhaps for housing.

The auto industry will consume in the next 41 years between 4 billion and 8 billion tons of steel, at least 25 billion tires, as much as 2 trillion pounds of plastics, and typically, and very conservatively, will increase its usage from around 1 billion gallons of gasoline per day that are burned today, to more than 3 billion gallons a day by 2050, if 100% of the vehicles then are still utilizing ICEs.

Even if 25% of the vehicles being built in 2050 are EVs, or 50% of them are, the demand for hydrocarbons then, will dwarf today’s numbers.

This will happen unless the political and social costs of ICEs, calculated along with the price of liquid hydrocarbons as economic costs, exceed the cost of motive force derived by using batteries to power electric motors.

The large oil companies are betting that this will not happen in the time frame that glib politicians spout off about. They are correct. The development of cost effective alternatives to burning hydrocarbons to produce electricity has slowed own and may have reached a plateau.

Clearly the obvious and only replacement for the coal-fired power plants that today produce more than half of the world’s electricity is to substitute for them the rapid and massive construction of nuclear power plants the capacity of which is now 10% of the global demand. But the issue here is political and social, not economic, because, if it weren’t, it would already have happened.

This doesn’t mean that it will never happen, but it does mean that solar, wind, geothermal, and biofuels, which can only ever produce a small contribution to the global demand for electricity, will never happen without political intervention on a massive economic scale that I think can now never happen.

The idea of the Obama administration providing an incentive to develop alternate energy sources with $150 billion over 10 years, is surely hypocritical against the $1 trillion a year now spent by the global petroleum industry, just to look for and develop new fields and new sources of hydrocarbons.

Innovation cannot be bought with money alone. It can only come about after long term investments in the health and welfare and education of the masses of the earth’s people.

The development of alternate energy sources that can replace the huge volumes of energy produced by burning hydrocarbons and splitting atoms of uranium and plutonium, may well occur or indeed have already occurred, but the replacement of our current energy infrastructure and the means by which we utilize it, such as ICEs, will take generations and will be slow and deliberate.

Anyone who tells you differently is simply wasting their breath.

A low-key but growing and deliberate (re)turn to the development of thorium-based nuclear reactor fuel is underway globally. The legislative branch of the United States government has now joined in promoting this project, as it begins to look like the development and implementation of the use of thorium-based nuclear reactor fuels may well turn out to be the ideal exit strategy, for those committed to the replacement of the burning of fossil fuels as the principle method of generating electricity by sustainable and/or renewable sources of energy. Many of them have already realized that wind, solar, biomass, geothermal, tidal and the old standard, hydroelectric, cannot hold an economic candle to the proven success and safety – yes, safety – of nuclear.

Even so, many Americans are still concerned that the possible military applications of uranium- or plutonium-fueled reactors outweigh the positive effects of the total elimination of greenhouse producing gases and the reduction, but not elimination, of the need to rely in part, on foreign sources for uranium. The use of thorium is the answer to these concerns.

Thorium has three main advantages over uranium as a source of nuclear fuel:

1. It can be used to make a reactor that produces only a small fraction of the “waste” today produced by uranium/plutonium reactors;
2. It can be used to build a reactor from which it is difficult and even impossible to extract anything useful for manufacturing an explosive-type nuclear weapon;
3. Thorium can be produced immediately and in large enough quantities, in the continental United States, to make the country completely independent of any reliance on foreign sourcing, while producing electricity in sufficient quantity so as to make the burning of fossil fuels for that purpose unnecessary.

Just as I am writing this, which is an updated version of a report I originally drafted in November 2009, “The Reasons to Invest in Thorium Energy Inc.,” the United States Geological Survey (USGS) has released a must read report, dated March 25, 2009, for those interested in a safe and secure America, independent of reliance on foreign sourcing for oil to generate electricity. The report is entitled “Thorium Deposits of the United States—Energy Resources for the Future?” . The USGS scientists provide the data to prove the validity of the third advantage, stated above, of thorium as a power metal for generating electricity in the United States.

On March 16, 2009, a bill, HR 1534, was introduced into the U.S. House of Representatives “To direct the Secretary of Defense and the Chairman of the Joint Chiefs of Staff to jointly carry out a study on the use of thorium-liquid fueled nuclear reactors for naval power needs, and for other purposes.” In the Senate, a bill, S 3680, “To amend the Atomic Energy Act of 1954 to provide for thorium fuel cycle nuclear power generation,” which is officially to be cited as the “Thorium Energy Independence and Security Act of 2008” was introduced originally on Oct. 2, 2008, (110 Congress 2nd session) and we believe will be reintroduced into the new session of Congress (111 Congress 1st session) for 2009. Thus, for the first time in history, both houses of Congress are considering bills to authorize, fund and require the study of thorium fuel technology.

It is important to note that since the United States does not recycle nuclear fuel, no new fuel technology can be implemented without a complete study of its disposal. Because all known thorium reactor fuel cycles are believed to produce significantly less waste than uranium and/or plutonium fuel cycles, that the complete cradle-to-grave management of thorium fuel cycles is to be funded and mandated for study is an indication of a possible revolution in nuclear fuel technology. Once the waste management differential has been publicly quantified, it will be a powerful impetus to the use of thorium.

Thorium as a reactor fuel component, is already being studied actively in India, because India’s government believes that India has significant deposits of thorium, whereas it is clear that India does not have very much domestic uranium. China is also beginning to study thorium-based nuclear reactor fuels, and China does have significant amounts of thorium associated with its very large and currently exploited – for rare earths – deposits of monazite and bastnaesite.

However, China has only now begun to sequester the thorium-enriched residues from rare earth processing that until now were largely ignored. Both India and China want to develop thorium as a nuclear fuel component to conserve uranium and reduce their demand for foreign sources of uranium, as well as to take advantage of an asset that has been overlooked as an energy resource that is non-polluting and domestically available. These are exactly the same reasons that the United States is now looking at thorium. If the thorium programs in India, China and the United States are successful, each nation will be a customer for technology and thorium from the others, and it looks like the United States has more thorium than either of the other two major “competitors,” and perhaps as much as both of them put together.

A recent press release by Canada’s world-class nuclear reactor engineering and construction company, AECL, Atomic Energy of Canada Ltd., headlines “AECL Formalizes Strategic Agreement with China to Extend Nuclear Fuel Resources.” This press release contains the pregnant sentence “AECL has tested thorium-based fuels in its test reactors and in the Rolphton, Ontario NPD 2 CANDU power reactor.” There are also indications, in agreements and announcements, that Europe and the Middle East are actively exploring thorium-based reactor programs for the non-proliferative generation of electricity.

Thorium Energy Inc. is one of the first U.S.-based companies to participate in the mining of critical metals for the core areas of economic growth of the 21st century, energy and high technology.

Summary

The production and supply of the rare earth metals, and of a small amount of byproduct thorium, as of March 31, is under the absolute control of mining operators under the strict control of the government of the People’s Republic of China. The demand for the rare earth metals as well as their supply, from the PRC, has been steadily growing from the beginning of the 21st century as more efficient, economical and environmentally friendly uses for the rare earth metals have caused them to be substituted for older, less-efficient base metals, and also to be used ab initio as the critical basis — it cannot be done without them — of new technologies. Thorium, the use of which was much greater at the beginning of the 20th century than at its end, has now turned a corner as the world stands on the threshold of a new age of nuclear power generation, which includes thorium-fueled reactors that have less waste, almost no weapons capability, and a larger resource basis by many times than uranium.

Thorium and the rare earths are almost always found together for reasons of geochemistry. China, in fact, is where the world’s still small supply of thorium is produced today, in conjunction with China’s dominant role in the production, today, of the rare earths.

A supply crisis is looming for both thorium and the rare earths. To put it simply; China’s industrialization is demanding increased tonnages of the rare earth metals at a growth rate of 15% a year. It is calculated that in 2008 China utilized, domestically, 80,000 metric tons (t) of its estimated production, for 2008, of 132,000 t of rare earths. This is 60% of the world’s supply. At a growth for demand of 15% per annum China’s domestic demand is calculated to exceed its production of the rare earths by the end of 2013 in which year China’s production and domestic demand will reach just over 150,000 t per annum.

A recent highly-regarded study calculates the global demand for rare earths in 2013 to be more than 200,000 t per annum, so that unless at least 50,000 t per year of new production is established outside of China, then China will simply have total control in 2013 of all technologies and industries critically dependent on rare earth metals.

China, just this last summer, ordered its rare earth mining and refining industries to halt the bulk disposal of thorium and to accumulate it for a “future use.” Miners have now been ordered to hold thorium-rich concentrates until notified by the central government as to their disposition. It is therefore also the case, that unless rare earth production outside of China can grow to fill in non-Chinese demand for the rare earths, then there can ultimately be no large-scale thorium nuclear reactor revolution without Chinese acquiescence and thorium supply.

To resolve both crises of supply — that is, that of the rare earths — in the near term, and of thorium, for the long term, the ideal mining opportunity outside of China then would be one that has the best combination of thorium and rare earth deposits.

Thorium Energy

Thorium Energy presents an outstanding opportunity for U.S. involvement in the global economic development of the 21st century. The company controls one of the world’s best sources of accessible epigenetic high-grade thorium for the coming future of non-proliferative nuclear (electric power) reactor fuel and simultaneously controls of one of the largest and most accessible deposits, as of yet undeveloped, in the world of the light rare earth elements (LREE). Thorium Energy’s mineral deposits are all located in the western United States in Idaho, Montana and Colorado and are within, or close by, well-developed infrastructures of good roads, ample electric power and water. They are thus minable.

The thorium and rare earth deposits now owned by Thorium Energy were first discovered and surveyed just after World War II, by major power utilities and industrial companies answering the call of the Federal Government to map America’s critical resources, for a future then envisioned to be powered by electricity generated by nuclear reactors, fueled with not just uranium but also with more abundant thorium. It was also to be an immediately optimistic future, filled with labor saving and health improving technologies based on innovations derived from the properties of America’s abundant domestic resources of minor metals and rare earths.

Companies like Idaho Power and Tenneco spent the current inflation-adjusted equivalent of tens of millions of dollars to survey and analyze the Lemhi Pass and Diamond Creek regions of Idaho, and the Idaho Geological Survey and the then Bureau of Mines Division of what is now The Bureau of Land Management. What is now the USGS sent professional geologists to validate and resurvey every square yard of these privately surveyed claims to create a verified inventory, for the future, of important and critical to-be-developed natural resources. Beginning in 1988, when the first phase of mineral discovery and banking had run its course, Thorium Energy’s predecessors began mining the accumulated data, and using the information thus obtained to acquire the richest claims from the first wave of post World War II mineral inventory building.

America and the world entered into a second phase of mapping strategic natural resources, just after the fall of Communism in the late 1980s, when it became clear that the geopolitical upheaval and the crescendo of new technological developments would combine to produce a wave of Asian development, which would first create an infrastructure built upon base metals and then, following that, begin a massive development of demand for the minor, technology and power metals such as the world had never before seen. Indeed, this development of Asian economies occurred and grew faster than anyone could have or did predict. At this moment, in Spring 2009, the Asian juggernaut is taking a breather; it will resume its furious expansion shortly, because it has no other direction to go in the face of an immense population now aware of, and exposed to, the largest and most rapid expansion of their standard of living and quality of life in history.

America has so-far squandered its great opportunity, not only to become a global provider of natural resources but even to remain self-sufficient and independent. The United States, however, remains the engine of the world’s economy, but consumption rather than production of resources has transformed the United States into a massive debtor, and so, when the economy finally overheated and sank beneath the weight of overextended borrowers and a vanishing industrial base from which to create wealth through exports, the global economy caught a cold.

China’s growth, in late 2008, is predicted to be only 8-9 % in 2009 rather than 10.5 %, and this is somehow considered a catastrophe even as it allows a China holding $2 trillion of U.S. Treasury debt to force down the prices of all commodity metals sold to China, thus enabling China to reduce the prices of its exports of durable goods and thus be able to recover earlier than the U.S. economy. In this current pause in the 21st century economic development of Asia, as the world catches its breath, Thorium Energy offers a once in a lifetime opportunity for investors to acquire the ownership of a domestic American resource base of thorium, the nuclear fuel of the future, and of the rare earths, the premier technology metals, used critically, for environmental control, shale and tar oil catalytic conversion to liquid petroleum, magnets for small powerful electric motors, and batteries for hybrid vehicles.

In 2008, Thorium Energy released the results of the company’s thorough review of the existing mineral data for its claims, combined with its own commissioned re-surveys and analyses of key properties identified by its consulting geologists. The information presented at the SME annual meeting in Salt Lake City in February 2008, has now generated a revision in the statements and estimates of reserves and resources of both thorium and of the rare earths by the USGS. The revised Thorium Commodity Mineral Review for 2008 has already been published. Note also the Thorium section of the USGS 2007 Minerals Yearbook.

The Lemhi Pass, Idaho holdings of Thorium Energy is mentioned prominently in this latest revision of the USGS Mineral Yearbook as major locations for thorium ores. The same USGS publication also refers to and validates the resources and reserves of rare earths associated with the thorium in the Lemhi Pass deposits. This will be expanded and elaborated upon by the USGS separately, when the revision of the USGS Rare Earth reserves and resources survey for 2008 is published.

It should be noted that the discovery of major resources of thorium and the rare earths at Diamond Creek, Idaho, by Thorium Energy were reported too late in 2008 for inclusion in the above USGS reports. The Diamond Creek discoveries along with two more in Colorado were publicly disclosed at the SME in Denver, CO, in February 2009 by Thorium Energy’s geological survey team and publishable figures will be available shortly.

The significance of the revised surveys is that a key event for the revision of both was the release of its data analysis and continuing survey data by Thorium Energy. It should be noted also that even as the latest USGS Thorium Review (2008) went to press, the company is continuing to discover additional resources and reserves of both thorium and of the light rare earths on the claims it has staked in Colorado as well as in Idaho.

The USGS came to the conclusion that it was time to update its surveys of both thorium and of the rare earth metals, because the rapidly accelerating interest in the industrial use of both types of resources, has made both of them into prominent strategic resources for the economic health, not only of the United States, but also of the world. The most important uses for these resources are nuclear power generation using thorium, reformation of heavy crude oil into usable forms, the manufacturing of high power small permanent magnets that make powerful and efficient electric motors possible, and the manufacturing of rechargeable batteries for use in hybrid vehicles and to store the electric power generated by wind, solar and geothermal electric generators using the light rare earth elements (LREEs).

The above uses were all discovered in the past, immediately generating intense interest in the critical resources to make them happen, and then faded from the hype of sound-bite prominence as their long technological developments took place. Today, thorium and the REEs are entering into their industrial growth phase so that the technologies developed around them can be realized and put into mass production. This has already occurred for the REEs and thorium is now poised to enter its first period as an industrial power metal.

The data and analyses that follow show that Thorium Energy is the best possible investment for the near future, because that future will be defined by thorium and the REEs.

To calculate the gross revenue potentials from the resources and reserves of thorium and the rare earths already discovered and, for the resources validated on the Thorium Energy properties, it is of course necessary to predict the prices of the metals to be recovered.

The problem with predicting the prices of thorium and the rare earth metals is that you need a base from which to start. There is no exchange on which one can trade these metals, which means simply that all purchases and sales of thorium and rare earth metals are by negotiation. This means, as with the case of any item that is not traded on an exchange, that the prices of the metals are not at all transparent. They are not readily found or guaranteed, so that you cannot manage the risk of price volatility in these metals by simply buying an option contract guaranteeing the delivery of a specific amount at a specific time in the future at a price fixed now.

The primary practical reason that no options contract exists on an exchange for thorium or any or all of the rare earth metals, is that their chemical reactivity when pure does not allow for the easy storage of any of them in a simple way. This means that it would be difficult and expensive to warehouse such metals so that they could be delivered to fulfill an options contract in a specific physical form and grade of purity as are gold, platinum, palladium, copper, zinc, nickel and tin from warehouses operated by the London Metal Exchange. In addition, the prices of these metals up until fairly recently, were low, so that in the year 2003, for example, a ton of exchange-traded palladium was worth as much as $7.5 million, so that the total production of palladium that year, around 225 tons had a value of nearly $1.7 billion. By contrast, the entire value of all of the 80,000 tons of rare earth metals produced and marketed that same year was $500 million, and most of that value and tonnage, 85%, was due to just three — lanthanum, cerium and neodymium — of the 17 rare earth elements.

Another reason – this one economic – that thorium and the rare earth metals do not lend themselves to being warehoused for delivery is that there is neither a surplus of them nor a large enough number of producers or traders of them — at least not enough well-financed producers and traders of them — to support the expenses of an market on an existing exchange. This could change in the future, but not until the supply base is much more diversified with the addition of producers with large resources and reserves of thorium, LREEs or both.

In the following discussion we will use the thorium prices obtained by the USGS as published in its above-mentioned and linked surveys.

The prices of the metals we are looking at today, are found by locating the existing producers, traders and end users and polling them on the prices that they either charge or receive for their metals. This is how the USGS establishes prices, and it is also how the best professional metal news reporting services, such as American Metal Market, Metal Pages, Asian Metal Pages and Metal Bulletin discover prices. Of course, it is necessary when using such a method of price discovery, to take into account the veracity of such data, as it impacts competitive advantage. Nonetheless having taken into account the shortcomings of an opaque market, well-known rare earth metals’ consultant and analyst, Dudley Kingsnorth, has charted the history and current values of the REE prices as shown in the following table:

The above table was prepared in August 2008. The data for 2009 are not yet available as of this writing, but it is clear that the rare earth metals have not suffered the loss in value that the structural base metals, such as copper, iron, aluminum and zinc, have. The rare earth metals appear to have achieved a secular demand that is constant and growing. The rate of growth may change due to global economic conditions, but there has developed a constant base.

Before projecting where we think the prices for thorium and the rare earth metals will be in 2012-13, by which time it is believed that the economy will be well into a global recovery, let’s look at an estimate of the value of Thorium Energy’s resources and reserves today. The supporting data for the calculations below are available from Thorium Energy upon request in the form of three extensively detailed reports prepared by Rich Reed, PE, PG:

• Appendix A (Lemhi Pass detail for Thorium);
• Appendix B (Diamond Creek), and
• Appendix C (Lemhi Pass detail for Rare Earth Elements).

I am starting my calculation for thorium with the 2007 price for 99.9% thorium dioxide of $200/kg, as reported by the USGS Thorium 2008 Commodity Mineral Yearbook cited above. I realize that this price is unrealistic, because it is based on the small production of refined thorium currently carried out. Even if we factor in the large scale mining of thorium as a factor in reducing its price, we must take into account that the only metal with which we can compare thorium is uranium, which is today mined in fairly large quantities and which has sold recently for as much as $100/lb. Considering that deposits containing accessible amounts of thorium are in fact more common than those of uranium by a factor usually cited as three or four times, I am going to use a figure for thorium as a base for nuclear fuel of $25/lb.

For the rare earths today, it is not the price of the individual metals that is important in the table below but rather their distribution, and this varies according to whether or not the ore body reports mainly the low-weight rare earth elements (LREEs) or mainly the heavyweight rare earth elements (HREEs). The table above showing the comparative values of the various distributions in one of the currently known deposits in Canada, and of the Lemhi Pass ores of Thorium Energy Inc. offer valuations from $16,000 to $33,000/ton, which is to say from $7.30/lb to $15.00/lb based on February 2008 pricing for the concentrates of mixed rare earth oxides (REOs) sold, or that would be produced and sold from the various distributions in the ore bodies at the two sites. I will use $10/lb as an average price for the REO concentrate that could be produced by Thorium Energy. This figure is very conservative.

Thorium Energy is not finished exploring its claims in the Lemhi Pass and Diamond Creek regions, and fully expects that the above statements of the total of indicated resources and inferred reserves to be conservative.

It is apparent that the Thorium Energy  indicated resources and inferred reserves may well constitute the largest such deposits in North America for the rare earth elements, and certainly are the largest deposits of high-grade thorium in North America, if not in the entire world.

This company also has a large additional body of claims in Colorado, on which substantial deposits of thorium and the rare earth elements have been verified. The company is now in the process of establishing the indicated reserves and inferred resources of both thorium and the REEs on the company properties based on the results reported at the SME in Denver, CO, on February 26, 2009.

As to future pricing of both thorium and the rare earth elements, it is clear that no matter what projects are advanced to production or begun outside of the PRC, it is the pricing established by the PRC that will dominate the thorium and rare earth space for the foreseeable future. It is clearly reasonable to assume also that both of these materials will be priced directly in renminbi rather than dollars in the near future so that not only will market fundamentals determine the future prices of both types of materials but also foreign currency exchange rates. Thus, the rumblings by China that it may not use the U.S. dollar as a benchmark or reserve currency are, in fact, positive for those who hold natural resources, which are priced by the Chinese through their dominance of a market.

The experts forecast that, by 2013, the prices of thorium and the rare earth elements, in U.S. dollars, will have doubled from their 2008 levels. Thus, the contained value of the indicated resources and inferred reserves of thorium and rare earth elements – in just the claims in the Lemhi Pass and Diamond Creek regions – would be approximately $45,000,000,000.

Each percent of the total value of Thorium Energy ’s indicated resources and inferred reserves would be $450,000,000.00.

The company believes that an independent verification of the resources and reserves, and the application of known methods of mining and concentrating the currently known grades of ores, would result in a high percentage of the total resources and reserves being judged accessible and economical. Even if this proved to be only between 5% and 10% of the total, the Thorium Energy claims would have a value now of as much as $2 billion now and $4 billion by 2013.

If you have questions or want to request the detailed data for Thorium Energy’s claims, indicated reserves and inferred resources, please email kennedy200@sbcglobal.net, the company’s Communications Coordinator. Note that at the moment, Thorium Energy is a closely held private company.

I urge you to read the new article from Mr. John Petersen called “Why Long Range EVs Can Never Be Cost Effective“, a thorough and comprehensive survey of the current state of lithium-ion battery technology development as it relates to the electrification of motor vehicles for private passenger-carrying use. When you are done with that, I urge you to read the associated article by the same author, entitled “Li-ion Battery Manufacturers: The Bleeding Edge of Energy Storage Technology”.

After reading both articles please tell me why there is any argument supporting the use of tax dollars to develop lithium-ion batteries, or engineering methods to mass produce them, if the sole purpose of that development is to power electrified vehicles, such as plug-in hybrids or battery only propelled motor cars for private passenger-carrying use?

I believe that the future of the electrification of motor vehicles for private use will be a mix of battery and internal combustion technologies for a very long time to come. I believe that whether or not privately owned passenger-carrying motor vehicles are mostly entirely battery powered, mostly hybrids powered by batteries and internal combustion engines (ICEs), or mostly powered only by ICEs, depends exclusively on the progress of the world in replacing the fossil fuel burning generation of electricity, with nuclear reactor-based generation of electricity.

Until such replacement has occurred. the cost of electricity will simply continue to go up until there is a critical shortage of electricity to produce and recycle base metals. and the mass production of technology metals has become prohibitively expensive.

If the nuclear replacement of fossil fuels occurs, then the generation of hydrogen by the electrolysis of seawater could make hydrogen universally and economically available enough to be used to fuel ICEs with only water as an exhaust.

In the meantime the critical driver for the electrification of private passenger-carrying motor vehicles will be COST. The political issue of reliance on foreign oil is after all ultimately one of cost and the risk of supply interruption. The so-called greenhouse gas emission reduction issue will shortly fade away, in the face of the increased COST it brings to our society without any obvious near term benefit.

As Mr. Petersen points out so well, we have already reached the bleeding edge of energy storage technology – the point at which increased spending brings decreasing or no valuable results.

In the near term, we will produce as many hybrids powered by nickel metal hydride batteries, as the rate of production of their critical raw materials and its percentage allocation to battery production allows. This I think cannot exceed 5,000,000 Toyota Prius-sized vehicles per annum.

A small number of small, limited range plug-in hybrids using lithium-ion batteries will be built, but I think that they will be supplanted rapidly by modern lead/carbon -acid battery powered vehicles, which are far more economical for short range, limited load and limited performance vehicles than expensive lithium-ion batteries.

Ultimately I think that the far more economical lead-acid batteries will be widely used for short range vehicles, and longer ranges will be obtained with nickel metal hydride hybrid systems.

There can be no shortage of lead based on currently known resources and reserves of that metal. If there is a serious need for longer range hybrids, then nickel metal hydride will be joined by lead-acid using systems.

As soon as this future trend is realized there will be a massive interest in recycling minor metals, such as the rare earths, so as to try and completely eliminate their waste.

Ideally a future driving world would be one where hydrogen-fueled ICEs are allied with hydrogen-using fuel cells, lead-acid batteries, and nickel metal hydride batteries in various combinations, and every component is made with recycling and rebuilding in mind from the start.

As a mass-produced energy storage system for private passenger-carrying motor vehicles, I think that lithium-ion batteries are a dead end.

I do agree with Mr. Petersen, however, that the wealthy and adolescent (wealthy ones only) may always drive foolish toys such as the Tesla, to show off their wealth by demonstrating that they can afford private vehicles powered by hugely expensive, hand-built lithium-ion batteries.

Let the braying begin as the era of interest in lithium peaks and begins to subside.

Although thorium is not today mined in the USA commercially, the US House of Representatives had placed before it on March 16 of this year, last week, a bill sponsored by Mr Joe Sestak (D-Pa) directing the US Navy to study all aspects of utilizing thorium in reactor fuel for shipboard propulsion. Rear Admiral Sestak (Ret) is the highest-ranking former military officer currently serving in the House of Representatives. Last month Senators Hatch and Reid introduced into the Senate, a bipartisan bill to amend the Atomic Energy Act of 1954 to authorize the Nuclear Regulatory Commission (NRC) to study thorium fuel configurations, and to fund such studies. There is certainly a lot of activity in this session of Congress with regard to a metal, which although the US has in abundance, is not mined here at all.

At the very beginning of the nuclear age it was well known that there were two naturally occurring elements which could be utilized to construct nuclear (controlled fission) reactors, uranium and thorium.

The first use for such reactors however was to breed plutonium, which it had been determined was the more practical of the two best studied known fission weapon explosives, uranium 235, and plutonium-239.

The United States alone had by 1960 constructed nearly 20,000 plutonium based nuclear weapons, and it wanted to conserve its supplies of uranium, as did the Soviet Union. Both countries however believed that global dependence on oil imported from politically unstable or immature states could not be relied upon as a safe source of electricity for civilian consumption. Both nations therefore were interested in looking at thorium as a fuel base for civilian reactors to be used solely to produce electricity.

Between 1960 and 1980. the USA constructed or revamped several reactors to test thorium-based fuel configurations. The Soviet Union is believed to have done the same thing. Both nations had the idea that thorium reactors could be, among other things, given to less developed nations so that those nations could not use such reactors to construct nuclear weapons, yet could be made politically and economically dependent on their benefactors both for reactor technology and maintenance and for the fuel and its disposal.

However, by the mid-1970s, it was obvious that politically, the expansion of nuclear power for civilian use was doomed due to the strong opposition of environmental as well as antinuclear activists, none of whom were interested in the facts about reliance on foreign oil or the reduction of the emissions from fossil fuel plants.

It was well known in the world nuclear industry by 1975, that thorium-based fuel could be utilized to dramatically reduce the waste volume from nuclear plants and that such reactors could be seeded with plutonium-239 from dismantled weapons, which in the operation of the reactor, would be rendered difficult or impossible to be utilized for further weapons construction. Nonetheless the development of such reactors under government funding and sponsorship ended in the early 1980s. In the USA, no nuclear reactor fuel can be used without being certified first by the NRC and no further funding was available to do so, so commercial development of such fuels was effectively terminated.

It seems that now, a generation later, with the world literally awash in plutonium from decommissioned weapons – there may be as much as 1000 metric tons of bomb grade plutonium just from decommissioned weapons – and with a growing belief that the supply of oil cannot keep up with the demand and that carbon dioxide emissions from burning fossil fuels are reaching critical levels affecting the world’s climate, it might be a good time to revisit thorium as a non-proliferative (plutonium burning), low waste production, seemingly-abundant nuclear reactor fuel.

The U.S. Congress certainly is almost on top of this one. Funding the NRC to test fuel designs, and authorizing the Navy to compare and contrast thorium reactors with the uranium/plutonium reactors currently in use, is an excellent way to get the job done. I commend the Congress for these actions.

One caveat, however; there is not today, nor has there probably ever been, a primary thorium mine. Thorium has been and is being recovered, in small amounts, as a byproduct from rare earth mining and from uranium mining.

It looks like there is a very large deposit of thorium in the Lemhi Pass region of Idaho and Montana. This deposit must be developed now, because if we are second time lucky with thorium reactors in the USA, and we have developed the deposits in Idaho and Montana, then the US will be self-sufficient in the production of electricity that does not require burning fossil fuel, and does not produce greenhouse gas emissions at all.

If the Lemhi Pass deposits are, in fact, as large as they seem, America can develop a new industry that sells thorium for reactor fuel to nations that have already shown an interest in such developments including India, Norway, China, Russia and even Canada. It looks to me as if it may be cheaper to produce thorium here in the USA, than it will be to do the same in India or China, which have large but diffuse deposits of thorium, contained in rare earth and heavy mineral “sands.”

And, last but not least, the US Navy will be able to build, use, and fuel reactors from resources entirely within the confines of and under the control of the United States of America. What a great idea!

I do not wish to condemn, nor glorify, the world’s oldest profession, but I note here that said profession has created an enduring capitalist business model, which is succinctly stated as “why give away something you can sell?”

I was reminded of this adage when a colleague sent me the link to a report titled “Report on 2009 World Market Forecasts for Imported Thorium Ores and Concentrates.”

Let me offer you the same information, and additional data, which I do not think the authors of the above report have, or have taken into account, for free.

The USGS has just released its commodity minerals summary for thorium for 2009. A more detailed USGS discussion of thorium market fundamentals and end-uses can be found in the USGS’s “2007 Minerals Yearbook: Thorium [Advance Release]” . Although the latter document is dated 2007, it was released in late 2008 and is an analysis based on information gathered by the very conservative and thorough USGS throughout most of 2008.

My take on thorium in 2009 is that it is most likely going to be the last natural element to become a technology metal. Therefore I want to take this opportunity to expose and dispose of some myths about the potential supply of thorium, and to bring you up to date on the potential for an explosive (excuse the pun) growth in demand for thorium.

The potential for thorium to be a breakout investment is based on its potential, and today more and more likely, its use as a nuclear fuel component for civilian reactors used exclusively to produce electricity. There are three reasons why this will most likely come to pass:

1. Reactors using thorium in their fuel can be constructed so that they produce little or no products useful for explosive type (fission- or fusion-based) nuclear weapons;
2. Thorium reactors previously built and currently near operation, or in the design stage, produce far less radioactive waste material than the presently used uranium and/or plutonium based reactors;
3. Thorium is more abundant in the earth’s crust by a factor of between three and four than uranium, and coincidentally is also found in recoverable (as a byproduct) grades and quantities in the United States, Canada, Australia, the Republic of South Africa, and the People’s Republic of China (that is, the mainland). It has not yet been mined as a primary ore (more on this in a moment) but is rather always produced as a byproduct of either uranium or rare-earth metals primary production.

Note the following statement from “Canadian Energy Research Institute – World Energy: The Past and Possible Futures – 2007”:

“Nuclear became an important source of energy following the first oil price shock in 1973. The main reasons for the rise of nuclear power are the low cost of fuel compared to other primary energy sources, and abundant uranium resources located in politically stable regions. Total known recoverable uranium resources equal 4.7 million tonnes, half of which are found in Australia, Kazakhstan, and Canada. Canada is currently the largest manufacturer of uranium, producing about one-third of the world’s total.”

So, therefore, in summary, thorium reactors are non-proliferative, they produce less waste, and even though there is a lot more thorium than uranium in the earth’s crust, the USGS and Canadian Energy Research Institute reports, which are current, clearly indicate that the minable resources and reserves of thorium are less than those of uranium. Even so, it is now apparent, and cannot be overemphasized at this point, that the largest minable resources and reserves of thorium are today, in order of size, in the United States, Australia, China and Canada.

Just as with uranium resources and reserves, it now turns out that the largest accessible supplies of thorium are in politically stable and reliable regions. In particular, it turns out that just as Canada has the world’s largest working deposits of minable uranium, it is possible to cast the United States in the same role for thorium if the political will can be found.

Why doesn’t everyone stop building uranium- and/or plutonium-based reactors and start building and only build, from now on, thorium fuel-type reactors? Let’s list some facts and then analyze them to find out.

1. Economics of uranium supply and demand:

• Nations, such as France, Japan, The United Kingdom and the United States, which produce a significant proportion of their electricity using nuclear reactors, have a very large investment in those reactors and a large supporting infrastructure of existing uranium supplies. The world’s nuclear industry operates a total of 443 commercial nuclear generating units with a total capacity of about 364.9 gigawatts (GW). To put this in perspective, if all of this nuclear generating capacity were in the United States, it would provide just about one-third of our current yearly demand. As of Dec. 31, 2007, there were 104 commercial nuclear generating units that were fully licensed by the U.S. Nuclear Regulatory Commission (NRC) to operate in the United States. Of these 104 reactors, 69 were categorized as pressurized water reactors (PWRs), totaling 65,100 net MW (electric), and 35 units were boiling water reactors (BWR), totaling 32,300 net MW (electric). Therefore the United States obtains about 10% of its electricity demand from commercial nuclear generating units. The corresponding figure for France is 80% and for Japan it is 34%.

• Nations, other than G-7 members, that are financially capable of building reactors, look upon the production of weapons-grade uranium and plutonium, as assets to insure the security of their political systems. Even if they sincerely do not plan to build nuclear weapons with the output of their reactors, that they could do so gives many of them clout in the political world far beyond what their GDP or population size can do.

• The mining of uranium is a long-established industry, for which incremental growth is possible and for which there is still active exploration. Most important, no one is concerned that political instability could interrupt Canada’s output of uranium!

2. Economics of thorium “demand”:

• There are no commercial thorium reactors in operation anywhere in the world, however…

• Thorium reactors were built at the beginning of the nuclear age, for testing the concept of purely civilian reactors that did not have a military weapons use, because of the non-weaponizability of their products, and so there is an archive of engineering design and operational data for those reactors. The best known thorium reactors were built in the United States and the Soviet Union, but may also have been constructed elsewhere, such as in the United Kingdom.

• No significant quantities of thorium have been purposefully mined or refined for at least 30-40 years, and there is at present, except perhaps in the People’s Republic of China, and most likely in India, no government- or privately sponsored exploration program for thorium.

• On the positive side, the major Western and Japanese commercial reactor builders, as well as the government-controlled ones in China, all have openly announced that they have recently been looking at thorium fuel designs, and one, Atomic Energy of Canada Ltd., AECL, has said that it already has a program being designed and tested to retrofit its well-known and widely used CANDU reactors for the utilization of thorium fuel.

• Additionally, India has announced that it is constructing or reconstructing a reactor to run principally on in-house designed thorium fuel, and that this reactor will be in operation within a couple of years and is intended to be a prototype, for a future family and mass-produced series of such reactors, to take advantage of what is claimed to be India’s large domestic resources of thorium.
• Other nations have evinced interest in thorium-fueled reactors and seem to have made investments in their development, including Norway, Russia, Canada, China and the United States.

• It is, unfortunately conceivable that the People’s Republic of China, which has lately made no secret of its interest in thorium-fueled reactors, and has instructed its rare-earth mines — today the sole producers of these metals — to hold thorium removed during separation and purifying of the rare earths for the State Nuclear Authority, may have it in mind to conserve uranium for military purposes by switching planned civilian nuclear electric generating capacity to thorium-fueled reactors. This may well also be the plan of the government of India, the world’s most vociferous proponent of thorium-fueled reactors.

3. The supply of thorium:

• Thorium has always been available as a byproduct of the mining of uranium and of the rare earths, but it has traditionally been considered either a liability or a low value material.

• Thorium reports and commentaries, without fail or exception, state that thorium is more common than uranium, but usually fail to emphasize that this is a statement of the relative abundances of both in the earth’s crust. It is in no way a statement of the relative distribution of thorium vs. that of uranium in known minable deposits, as discussed above and below…

• There is actually no way to verify the thorium reserves that are contained in the world’s existing rare-earth mines, because to the best of our knowledge, such measurements have simply not been made, and, if they have, have certainly not been made public by the world’s largest and most actively mined rare-earth deposits in the Bayanobo region of Inner Mongolia in the PRC. There are today no significant rare-earth mining operations anywhere outside of the Bayanobo region. The largest previous single source mine for rare earths in Mountain Pass, Calif., stated to a magazine writer last month, that it had no thorium production associated with its hoped-for reopening of operations. The two large Australian rare-earth startups, Lynas and Arafura, also do not comment on any planned thorium production, and, in any case, are both in turmoil due to the current economic crisis. Lynas has suspended operations and Arafura is not only not operating but is also in the process of selling a large stake to a Chinese operator. It is not commonly known whether India, which always claims to have significantly more thorium than uranium, in fact produces any thorium from its deposits of monazite “sands,” which do contain low levels of “disseminated” thorium but are principally an ore of the rare earths of which India has very limited production. Finally, Russia produces some rare earths and thus could produce some limited amount of thorium, but it is not known if it does.

• Uranium miners even in Canada have not announced any plans to produce thorium, nor do any of them show thorium quantity produced in their accounts. The same is true for Australian producers, and Kazakh thorium statistics do not exist.

• The best opportunity today to produce thorium in quantity from a high-grade deposit ,would be in the United States in the Lemhi Pass region of Idaho and Montana. The claims in that region are owned today by Thorium Energy, a privately held company, which purchased and extended the claims staked beginning 50 years ago by a group of utilities and engineering companies, starting with Idaho Power. Those companies were looking for uranium (and thorium) for the purpose of becoming self-sufficient and vertically integrated as nuclear power producers, but they were premature. The age of thorium was not yet ready to be born. Idaho Power and its successors noted also that the claims were rich in rare earths, but just as with thorium, the birth of the age of those technology metals was still in the future.

• Today, Thorium Energy, is in a unique position. It may be able to open the first primary thorium mine in American history with a substantial rare-earths byproduct stream, if the demand is there, or it can develop a primary rare-earth mining operation in the Lemhi Pass with a substantial thorium output as a byproduct. Economics and politics will determine which of the two paths is followed, or if neither path is taken.

The conclusion at this point in time ,of this first Thorium Report for 2009, is that a thorium-fueled civilian-use-only nuclear electric generating industry is looming on the economic and political horizon. At this moment, no one knows how much thorium it is possible to produce as an adjunct to rare-earth or uranium mining, but we do know that one of the largest deposits of high-grade thorium and rare earths in the world is located in the Lemhi Pass region of Idaho and Montana. This deposit is accessible and minable.

America could become completely self-sufficient in non-proliferative nuclear electric power production and reduce its carbon footprint without sacrificing its standard of living or quality of life. Let’s see if our politicians have the will and leadership skills to make this happen. Our future depends on it.

There’s great rejoicing tonight in Salmon, Idaho, because Salmon is the closest town to the Lemhi Pass, and the Lemhi Pass is the location of America’s largest and possibly the world’s richest high-grade thorium oxide deposits.

“So what?” Well, here’s what’s what.

On October 2, 2008, Senator Hatch (R-UT) and Senator Reid (D-NV), then as now the Senate Majority Leader, introduced into the agenda for consideration by the United States Senate, a bi-partisan bill, S-3680, entitled the “Thorium Energy Independence and Security Act of 2008“.

The press release put out by Senator Hatch’s office that same day, contained the following paragraph:

“Using thorium for nuclear power has a number of potential benefits over conventional uranium. As a resource, thorium is abundant in the U.S. and throughout the world. A thorium fuel rod would remain in the reactor about three times as long as conventional nuclear fuel, cutting the volume of spent nuclear fuel by as much as two-thirds. Also, thorium nuclear fuel would significantly reduce the possibility that weapons-grade material would result from the process. Finally, a thorium fuel cycle could be used to dispose of existing plutonium stockpiles, which is the national security goal.”

The above paragraph sums up the arguments for using thorium-based fuel as an alternative to uranium-based fuel for nuclear reactors, which I myself first wrote about elsewhere in 2006 in an article I called “Thorium: An Alternative to Uranium”. I updated that article in early 2007 in my next thorium-themed article,”Thorium, An Alternative to Uranium, 2007 Update“. Later that year I wrote “Thorium, the Answer to the Question ‘How Do You Hedge Uranium?’”. In February 2008 I wrote “How to Invest in Rare Earths and Thorium”, and now one year later, I think that my timing has been right on the mark, and I want to tell you what has happened and what the natural resource investment opportunities for thorium are now, and are going to be.

I want to direct your attention to news releases that have been published since the beginning of 2009. If they don’t quicken your interest in the potential of thorium, especially when combined with the Hatch-Reid Bill, then you are simply uninterested in the future direction of non-proliferative low-waste nuclear power. This technology uses a natural resource the United States now possesses in significant abundance. American mining and refining technology for minor metals, and radioactive metals in particular, is the most advanced and safest in the world.  This situation could make America the principal producer, refiner and exporter of the thorium fuels that are being developed around the world, because, my dear investing public, America probably has more accessible high-grade deposits of thorium that anyone else.

Back to the 2009 news: Check out the International Herald Tribune for February 3, 2009, and you will see the analytical news piece called “A model nuclear-power deal?” This details the negotiations and agreement between the USA and the Arab states of the Persian Gulf, such as Dubai and Kuwait, that was done in Condoleezza Rice’s last days as Secretary of State. It would give the Emirates the right to buy nuclear power reactor technology from American companies, in return for the agreements of the Gulf governments not to ask for or obtain any technology that can be used to make nuclear weapons. As the article points out, a good way to achieve this goal, with no possibility of cheating by either side, is to utilize thorium-based fuel for the reactors. This deal has been announced since the Obama administration took office, and therefore we must assume that it is in line with the new President’s policies for reducing greenhouse gas emitting power plant construction and reducing and stopping the proliferation of nuclear weapons. It can be no coincidence that the Hatch-Reid Bill is about to be re-introduced into the new Congress. Clearly, the administration has signaled its support for amending the Atomic Energy Act of 1954 to include funding for research and development of thorium-based fuels, thorium reactors, and thorium reactor waste disposal techniques.

I am personally aware of the fact that, even as I write, major American, Canadian, French and British nuclear engineering companies are forming strategic alliances to seek funding under Hatch-Reid, to go forward with the development of thorium-based nuclear power reactors for the production of electricity for civilian use.

One year ago at the SME, the USGS sponsored the first annual rare earths seminar. The second annual one will be held at the SME annual meeting this year in Denver on February 26. I attended last year’s conference in Salt Lake City, and I asked, as did others, about the thorium normally found in rare earth ore bodies in North America. The uniform answer from almost all of the miners attending, was that “we contain it.” It is removed early on in the separation of the light rare earths, lanthanum to neodymium, and is then contained by being put aside and immobilized. There is often uranium as well as thorium associated with rare earth ore bodies, so I was told that thorium containment is “no problemo” as some miners put it at the conference.

I noted that although everyone at the conference had knowledge of the possible use of thorium in non-proliferative low waste reactors, they viewed that as a rather distant possibility and clearly then, in February 2008, classed thorium as a liability and as a cost to be contained.

As the song says, “What a difference a year makes.” The Indian Atomic Energy Authority announced at the beginning of 2009 that it would convert an existing reactor to use thorium-based fuel, with the thorium coming from India’s own monazite sands.

Even earlier than that in Hong Kong in September, I was told that the Chinese government had asked an American manager of a Bayanobo mining operation to tell them just what happened to the thorium separated there from the rare earths. He told me that he was instructed to gather and hold thorium concentrates from now on, and that they would be picked up by the Chinese nuclear power authority, because China was going ahead with the design and building of thorium-based fuel for “thorium” reactors, since China has so much thorium as a byproduct of its world’s largest rare earth mining operations.

Last week, Canada’s Great Western Minerals Group (GWMG), which told the SME conference in 2007 that its Hoidas Lake, Saskatchewan rare earth deposit was particularly low in thorium, and saw that as a positive, announced that it had bought a concession in the Republic of South Africa to reopen a mine for rare earths that was developed in the 1950s by AngloAmerican originally to produce thorium. GWMG further disclosed that a South African utility had made a deal with GWMG, to have it “contain” the thorium produced in the rare earth mining operation in concrete, so that the utility could take it to their own site when they have prepared it. The utility told them that the South African government has evinced a strong interest in building thorium-based nuclear reactors, and that the utility wants to have a domestic fuel source.

So now, what does this have to do with Salmon, Idaho? The answer is that it is the closest town to the claims of the private junior mining company, Thorium Energy, which announced last year at the SME that its Lemhi Pass, Idaho and other nearby properties were being validated with regard to reserves and resources of thorium, which the company said looked like they might be the richest and most extensive in North America. The USGS has now recognized that the company’s thorium reserves and resources are among the largest in the world and recently amended its Commodity Survey of Thorium to reflect that. Thorium Energy’s claims also contain substantial quantities of the rare earths, particularly of the light rare earths. An engineering manager at an American nuclear engineering company moving forward on the development of thorium reactors, pointed out to me last week that Thorium Energy could produce thorium as a product ,along with rare earth elements as a secondary product, or the other way around. In the one case, he noted that Thorium Energy would become and could well become, the world’s first primary thorium miner in half a century, and perhaps the largest one ever, if the validation is accurate.

The engineer thought that as a step towards American energy self sufficiency and independence, it was potentially a giant step. Perhaps we are about to step into the age of the last of the power metals to be developed for mankind’s use, thorium.