D.卡尔顿 罗西
D. Carlton Rossi

Strategic Acquisition


                     China's Strategic Acquisition Program

                                                       Quantum Entanglement

Professor Burton has recently said that "China's interest in Canada goes beyond trade to a commitment to establish a “strategic partnership” between our nations. This encompasses a broad range of non-economic elements, raising the possibility of Canada becoming more economically reliant on Chinese trade and investment. This author is in agreement with Professor Burton in terms of broad strokes. However, the Canadian government has consistently termed the three sets of negotiations "exploratory free-trade" talks. Are they oblivious to the obvious?

While China may want a strategic partnership it appears to the author though that what it really intends is strategic acquisition. The author would like to explore in more detail what strategic acquisition might encompass with regard to strategic assets of Canada. He will deal at first with the Chinese acquisition of ITF Technologies.  ITF makes fibre-laser technology for communications and industry which can be used in direct-energy weapons. The technology can also apply to information processing with regard to quantum computing. "A review of photonic industry research between 2005 and 2009 shows CSE, the NRC and DND were affiliates, along with ITF, in a project that uses quantum cryptography to make advances in a field where experts try to produce coded messages that are difficult or impossible to crack. The research project concerned “absolutely secure optical fibre networks using quantum cryptography.”

However, in July 2014, Canada accused China and a sophisticated state-sponsered actor of attempting to break into the files of the National Research Council. The word "attempting" is an underestimation and underreporting. They broke into the files and stole them using emails, hacking and malware. That action would not be covered of course by the recently signed commercial anti-hacking agreement between China and Canada because it does not apply to governments.

It so happens that one of the prime areas of research of the NRC is in the area of quantum computing through photonics whose goal is to create unbreakable code. That general information is available to the public through the website of the NRC. However, the Canadian Ministry of Science, Information and Technology punishes the Chinese for their intrusive attack into private and secure files of the NRC by allowing them to buy Canada's leading company in the area of photonics (unbreakable code) or ITF Technologies? It rewards the Chinese for their hacking of the NRC by signing a commercial hacking agreement between China and Canada? All the author can say is "Nuts". That was the word used by the besieged commander of the Bastogne garrison in the German advance during the Battle of the Bulge.

D.卡尔顿 罗西


Montreal firm targeted in Chinese takeover did research with Canadian government

Steven Chase

OTTAWA — The Globe and Mail

Jan. 13, 2017


Canada accuses China of hacking into National Research Council CNE

Don Reisinger

July 30, 2014


This piece is part of The China Debates series for Inside Policy, with commissioned articles from leading world experts exploring different elements of China’s rise as a great power.

Charles Burton, July 7, 2017



                              China's Strategic Acquisition Program

2. Norsat International

The sale of Norsat International without an in-depth national security review to a Chinese firm is so egregious and notorious it is incomprehensible. A government's strongest duty is to protect its citizens. The Liberal government has effectively relinquished its duty and sanctioned what may be regarded as a fifth column or Trojan horse on Canadian soil and in the skies.

The acquisition of Norsat also marks the end of the foreign policy established more than half a century ago by Zhou Enlai at the Bandung Conference in 1955. Two principles affirmed were non-interference and respect for the sovereignty of others. The Norsat acquisition interferes with the protection of Canada's vital and critical communications network under the aegis of Norsat as well as infringes and impinges on our sovereignty. The Chinese have complained about barriers of trade protection while 40% of their industry is state-controlled; but, it is Canada's security and state of emergency protection which is at stake.

In the Norsat acquisition, China is also pursuing a divide and conquer strategy. They are fully aware that if Canada will not initiate a full in-depth security review then a statutory review will be made by the Committee on Foreign Investment in the United States (CFIUS). It may be that customers such as the U.S. Department of Defence, U.S. Marine Corps, U.S. Army and independently NATO will decide to reconsider their contracts. Canadian companies concerned with emergency services may be pressured by the government to remain as customers, but what if the emergency stems from without rather than within. These Canadian companies will probably be joined by Chinese companies which deal with sensitive security matters, too.

It is troubling to the author that a decison on Norsat happened at the same as a dispute with Boeing. The aircraft manufacturer complained that Bombardier's jet was unfairly subsidized. Boeing is a customer of Norsat. Boeing may be adversely affected by the takeover with regard to its communications.

China has strongly expressed that it wishes Chinese firms to be considered for all government contracts--including military. Canada has announced a large military program which includes aircraft and ship purchase; however, it hasn't explained how it will pay for it. It would be a misguided error of enormous proportions to allow China to bid on contracts with the promise of low interest loans and saddle Canada with indebtedness to an authoritarian regime. To counter this prospect the author suggests purchasing two aircraft carrier (helicopter and fixed wing) from the Japanese to protect the Canada's sovereignty of the Northwest Passage which the Chinese regard as an international passage and through which they may clandestingly intend to extend their territorial sovereignty.

D.卡尔顿 罗西


Chinese firm expelled from trade association
days before takeover of Canadian high-tech company

The Globe and Mail

Robert Fife and Steven Chase


July 21, 2017

A Chinese telecom giant at the centre of a controversial takeover of a Canadian high-tech firm has run afoul of China's powerful Ministry of Public Security.

Hytera Communications – whose principal shareholder is billionaire chairman Chen Qingzhou – has had long-standing close ties to the ministry that oversees China's police and security agencies. It has won numerous contracts to supply mobile and digital radio systems to Chinese police departments and local governments.

But last month, just days before it closed a deal to buy Vancouver-based Norsat International, Hytera was suddenly expelled from a mobile-technology trade association run by the ministry for its involvement in disputed bidding on a police contract.

The expulsion is unrelated to the takeover of the Canadian satellite communications company, but critics say Hytera's past connections to Chinese security authorities and its questionable business dealings should have raised red flags in Ottawa.

Aside from the security concerns raised by the Hytera takeover, Mr. Burton said he was puzzled over why Ottawa allowed the deal to proceed given Hytera's ties to China's public-security ministry.

"It is clear that Hytera is complicit in developing technologies for the use of police communications," Mr. Burton said. "Canada has in past been unwilling to transfer technologies for Chinese police use due to the pervasive reports of Chinese police violations of human rights through gross invasion of privacy of communications in investigations and use of torture in interrogation."



                           China's Strategic Acquisition Program


3. The Port of Churchill

Comments on the Port of Churchill have already been made prior to the disaster it faced recently in terms of rail transportation and are included below. The author will recapitulate his views in summary form regarding the necessity to nationalize the port and introduce some new arguments. The Hon. Navdeep Bains has been assigned the portfolio to deal with the disaster. It will be remembered that Bains was responsible for handling the Norsat International acquisition by the Chinese firm Hytera which opened up a hornet's nest of official opposition and condemnation by Canadians.

It is contended by the author that the Port of Churchill should be nationalized. The port holds strategic importance regarding its position relative to the Northwest Passage. It appears the government holds the contrary view that both the entrance and egress of the passage is of strategic importance. In doing so it has neglected to examine the importance of the Port of Churchill. A foreign country which controls the port effectively controls the entrance and egress because it would have carte blanche to enter or leave Hudson's Bay through the passage.

Canada and the people of Churchill must be in control of the port so that development benefits the country, nearby region and the town. However, keep in mind the example of the Port of Darwin, Australia. A Chinese owned company has been granted a 99 year lease at the Darwin port which the navy regards as vitally important and from which border operations are conducted. This is another example of China breaking course with its non-interference principle as it uses subterfuge.

This means at the Port of Churchill that China may try to maximize to the fullest extent its state-controlled monopolies in cement, steel, coal, rail and electricity. Not only is the Liberal government not objecting to the involvement of state-owned and controlled monopolies, but appears to embrace their involvement in various projects such as a contemplated swap of heavy oil for wind turbines (steel). Misguided souls believe that environmental degradation will be balanced by environmental preservation. However, if one mixes brown and green colours then one get brown.

Both the Liberal and Communist governments may try to decide Churchill's fate in secret exploratory talks without the encumbrances of public scrutiny in open free-trade talks. Both countries are prolonging secret exploratory talks which are in fact free-trade talks by any other name since they are both committed to free-trade. There is no doubt about Canada's and China's acceptance of free-trade. There is no doubt according to the present trend that the Liberal government will accept an extradition treaty in order to gain free-trade and also to sacrifice security interests to achieve the same end based on the ITF and Norsat examples.

China and the United States hold the view that the Northwest Passage is an international passageway. However, what if the Chinese were willing to support the Canadian view that its section of the passageway was Canadian territory in the same way that the South China Sea was Chinese territory? The Chinese claim to the South China Sea seems to be tacitly acknowledged or at least not denied by the Liberal government. This potential strategy of the Chinese would again utilize the divide and conquer approach in order to separate Canada from American influence and ultimately to weaken American power. It arguably would be a strategic partnership based on the Chinese acquisition of the Port of Churchill converted into a commercial/naval port whereby China would enforce Canada's claim to the passage with its navy and keep it open for trade with its icebreakers.

The author concedes this may be a far-fetched scenario. However, consider how the Trudeau dynasty has been non-judgemental of authoritarian regimes in both Cuba and China. Consider how a Marxist-Leninist is the chief advisor to the President of the United States. In addition, the President inexplicibly shows fondness for Putin while his son and son-in-law have met with Russians during an election concerning Hillary's emails.

Let's not forget the proposal by Huang Nubo who was a former official of the Communist Party's Propaganda Department to build a golf course at Grimsstadirg, Iceland. The business plan was not very convincing. "The area’s relative proximity to deep fjords on Iceland’s northeast coast near offshore oil reserves fueled speculation about a Chinese push for a naval facility and access to the Arctic’s bountiful supplies of natural resources."


                                     The Hudson Stone

There was a recent discovery made concerning the death of Henry Hudson who was an explorer. It is to be remembered that his expedition was searching for the Northwest Passage, but he found a large bay which was named Hudson's Bay. His ship became blocked by ice in James Bay and the crew demanded through mutiny that the ship return. The ship sailed without Hudson and a few shipmates. Apparently, Hudson made it to Chalk River in the Ottawa Valley. A stone was found on February 5th, 2014 inscribed "H.H. 1612 Captive". Will a future stone be found in Ottawa inscribed "CA 2517 Captive"?

D.卡尔顿 罗西



                                  The Port of Churchill

The Tragedy of Churchill

An unexpected tragedy has happened at Churchill, Manitoba. At least it is unexpected as far as the effects of global warming can be. For the moment, one does not have to worry about melting of the permafrost. Spring run-off has undermined the rail lines into the port. There is no short-term fix to the problem. The rail lines are owned by an American concern which has been trying to sell the port.

The Chinese were invited to Churchill earlier. They have keenly expressed interest in the port. It is just the kind of infrastructure project that they thrive on to expand their state-owned steel enterprises. It will give them strategic control of the Arctic. By the way, they recommend that the local people learn Chinese.

However, the citizens of Churchill want to control their own destiny. The NDP representative has proposed on their behalf that the port be nationalized. They had wanted to see grain from the prairies by rail loaded onto ships during the short period that the port was open, but their hopes were dashed because the federal government was not receptive to their request.

Can the hope of the citizens of Churchill be any less than the citizens of Canada who want to control their own destiny? That hope can be realized through the nationalization of the port. The government of Canada can then control the development so that it benefits all citizens. No longer will the interest of citizens fall second place to foreign interests whether they be American or Chinese.

Ultimately, the Chinese want the port as their own. They can then make Hudson's Bay their own pond. Of course, they are not interested in the fur trade which historically was one of the pillars of the country that was to become Canada. It is probable that they want to control Hudson Bay since three provinces border it. They then have access to those three provinces and they will control the north of those three provinces.

The Churchill River is the ninth longest in Canada. It flows through Alberta, Saskatchewan and Manitoba into Hudson Bay. It is also known by the Cree name Missinipi, meaning "big waters". The Chinese will argue that it is foolish to let the river flow completely into the bay as it then mixes with salt river. They will want to see the bay become salt water even though it will upset the ecological balance of the region. They will want to take the fresh water by tanker to China. The issue of water involves environmental, indigenous peoples and national security issues. 

Most importantly though they will want the port to establish their claim to the Northwest Passage as an international passageway or eventually as their own. As such they can simply say that they want to go to their port and they have the right to go to their port without restriction. If they own the port then who can stop them docking their navy at the port and building support facilities for it and an airport capable of handling military transport or fighter jets.

The author is reminded of the town of Narvik, Norway prior to World War II. Churchill warned the British of its strategic, military importance because of its vast resources of iron ore. Those resources would be critical to any war effort against Nazi Germany. However, with Paris about to fall in a matter of days. Churchill writes "In Norway it appeared that Narvik was likely to be captured by us at any moment, but Lord Cork was informed that in the light of the the news from France no more reinforcements could be sent to him". On June 2, Narvik was evacuated and the evacuation of Dunkirk began. As a result, Nazi Germany gained control of the iron ore resources for its war effort.

The decision about the port of Churchill will come to Innovation, Science and Economic Development Minister Navdeep Bains. This minister was intimately connected to the decision on the now infamous Norsat giveaway to the Chinese who claimed any decision to not allow the sale was protectionist (even though 40% of their industries are state-controlled monopolies). The Chinese must not be allowed to purchase this port. Before the decision to allow a sale to the Chinese a full national security review must be done with the lessons of the port of Darwin to be kept in mind regarding national defence and security implications.

It should be noted that the Liberal Prime Minister William Lyon Mackenzie King paid a visit to Hitler prior to the great conflagration. He told Hitler that he was proud to be born in a city which had been called Berlin, Ontario. He praised Hitler and sought to ingratiate himself to the dictator. King may have become lulled by Hitler's assurances of peace and a lullaby sung by his dead mother in seance. He appeased. Appeasement, today, is not an option.

In summary, if the citizens of Churchill wish to control the port and the citizens of Canada wish to control their own destiny then the port must be nationalized. Citizens can then direct what they want and what they don't want with the port. It is time that the Liberal government begin to think strategically and long term about the interests of Canada and go beyond the narrow interests of some Canadian executives who act as piratical piranha; otherwise, we will not be celebrating our 200th anniversary.

D.卡尔顿 罗西



                                             Quantum Teleportation

China's Strategic Acquisition Program

4. HREE (Heavy Rare Earth Element)

a. Holmium

The author has been acquainted with the heavy rare earth elements for a considerable length of time. Around the year 1978 the author purchased shares of Highwood Resources which was a Canadian company that had discovered HREE at Thor Lake in a 1976-1979 exploration program. To put this date into perspective it wasn't until 1987 that Deng Xiaopeng predicted that the Inner Mongolia Autonomous Region would be in the front-ranks of rare earth development. Deng was quoted as saying “中東有石油,中國有稀土.” (The Middle East has its oil, China has rare earth) in a speech he made in January 1992. He also said that "it is of extremely important strategic significance; we must be sure to handle the rare earth issue properly and make the fullest use of our country's advantage in rare earth resources.”However, today, the Liberal government has still not recognized that REE's are a strategic material and that holmium may be the most critical HREE element.

Why does the author come to this conclusion concerning Holmium? The Liberal government allowed the sale of ITF Technologies to the Chinese despite the fact or perhaps because of the fact that the previous government had disallowed it. Holmium plays a critical role in both lasers and quantum entanglement in which ITF was involved.

In the article called "Holmium: Key Element in the Future of Warfare" it is said by Mark Stokes that Holmium is used in China's laser program where almost 40% of R&D is used for military purposes. It is speculated that advanced lasers may have been used in the blinding of a U.S. surveillance satellite by the Chinese. Lasers also are used in direct energy weapons and rail gun technology and it seems that these were the particular concern of security analysts regarding the Chinese purchase of ITF Technologies.


                                       Quantum Computer

In a pioneering paper, Bell discussed quantum entanglement with regard to the behaviour of electrons that "have interacted in the past and then moved apart". It has been realized since that the Holmium atom can be regarded as the world's smallest magnet. As such it can store information in a state of quantum entanglement. Chinese scientists at the University of Science and Technology in China over a period of 14 have made a breakthrough discovery by sending pairs of photons in entanglement through a laser beam from the satellite Micius to ground stations separated by 1203 kilometers. In other words, they have sent a message that cannot be broken by cryptographers and there exists the probability for the Chinese to break other codes. This represents a landmark advance in quantum computing and unbreakable codes which can be used in warfare.


                                   Nancheng County, Jiangxi

The Chinese have large deposits of HREE at many sites of ionic clay; although, they may be depleted in about 20 years because of increased demand. However, the Chinese have strategic reserves of LREE and HREE. They most assuredly include Holmium due to its critical military importance.

The Chinese have tried to buy several Australian rare earth companies. However, for example, the Australian Foreign Investment Review Board quenched a bid for a 51% stake in Australia's Lynas Corporation which owns the most developed rare earth mine. The Board has also limited Chinese acquisition to JV. It is a fact that China does not allow foreign ownership of REE resources, but it does everything it can to force JV as it controls market and price of REE. The Liberal government of Canada has no definitive policy on foreign acquisition of REE companies let alone REE strategy. It does not protect REE, it rejects protection of REE and therefore it projects weakness on REE.

Currently, it said that the global production of Holmium is 10,000 US tons. A Canadian company called Matamec Explorations has estimated that its Kipiwa deposit is expected to produce an average 31.2 tons per year of Holmium oxide over the life-of-mine. Varok who is a knowledgeable investor of MAT has said in a blog on March 03, 2017 that "If I take your 30000 (US) tons a year as factual, it represents 27215542 kilograms. Therefore, at 49 dollars US a kilo (2017 US price) it would be about 1.3 billion US dollars annually for holmium oxide sales for Matamec and not taking into account other oxides. The mine life is estimated at 15.2 years.

What is the Liberal government's policy to protect this company whose shares sell for .04 under the symbol V.MAT from a takeover by a Chinese firm? The Chinese will cry "protection" if the government prevents the sale. However, the company really does need to be protected for the sake of Canadians by the government from the Chinese who hold 97% of the processing of REE. The author contends that if the Chinese overwhelmingly control processing of REE that any involvement in overseas acquisition of REE resources, reserves and technology represents interference in those country's internal affairs.

China regards HREE as strategic minerals so they protect them in various ways.

1) Approval from the State

 In 1990, the Chinese Government declared rare earths to be a protected and strategic mineral. As a consequence, foreign investors are prohibited from mining rare earths and are restricted from participating in rare-earth smelting and separation projects except in joint ventures with Chinese firms. All projects for rare-earth mining and smelting, whatever their size, required approval from the State Development and Planning Commission (SDPC) (formerly the State Planning Commission), which included the Rare-Earth Office. Sino-foreign joint-venture projects had to be approved by both SDPC and the Ministry of Commerce (MOC); prior to 2003, the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) approved Sino-foreign joint ventures in rare earths. Refer to updated information on site.

USGS 2011

2) Stockpiling

For this year, a total of roughly 5,000 tons of nine types of rare-earth metals are expected to be set aside as commercial reserves in three installments. Refer to latest organizations which grant approval.

In addition, Beijing plans to create a separate national reserve by purchasing rare-earth metals from the six major suppliers. The initial scale of this stockpile is estimated at 15,000 tons. The combined 20,000 tons in national and commercial reserves is a significant amount, considering China's total annual output is said to be roughly 100,000 tons.

Asia Nikkei, June 16, 2016

3) Direct subsidies

China decided to provide direct subsidies to struggling producers. The subsidies are between $35-million and $40-million for the industry annually, according to Financial Times calculations - they underline Beijing's determination to reshape the industry in a way that allows the state to have greater control over prices and supply. Over the past year, regulators have encouraged rare earths stockpiling to help boost prices. Under the new Chinese scheme, licensed rare earths miners and processors will receive subsidies of 1,000 yuan ($160) per tonne of ore mining capacity, and 1,500 yuan per tonne for processing capacity.

Financial Times, March 26, 2017

4) Business and Family

 Deng’s Shanghai Wangchao Investment Co. bought a 30 percent stake in Jiangxi Rare Earth for 450 million yuan ($71 million) in 2008, according to a bond prospectus. Deng owned 60 percent of Shanghai Wangchao. A copy of Deng’s Chinese identity card found in company registry documents matches one found in filings of a Yuanwei subsidiary. Yuanwei group-linked executives held the posts of vice chairman and chief financial officer in Jiangxi Rare Earth, the filings show. The investment came as China, which has a near monopoly on production of the metals, was tightening control over production and exports, a policy that led to a more than fourfold surge in prices for some rare earths in 2011.

The Confluence of Business and Politics, June 30, 2012


                                       Baotou Wasteland

5) Lax Environmental Law and Enforcement

“The refinery on the other side of the lake is the largest rare earth plant on the planet and all the waste material from this process is dumped here. It is an ocean of black mud continually pumped out from a long line of plastic pipes,” he says. This toxic waste was found to have radiation levels three times the background radiation level and was made up of a cocktail of acids, heavy metals, carcinogens and radioactive material used to process the 17 most sought after minerals in the world, says Davies.

Baotao is the world's largest supplier ...

                        Detention of Chinese Fishing Vessel

6. Export Restrictions

Sharply raising the stakes in a dispute over Japan’s detention of a Chinese fishing trawler captain, the Chinese government has blocked exports to Japan of a crucial category of minerals used in products like hybrid cars, wind turbines and guided missiles.

Chinese customs officials are halting shipments to Japan of so-called rare earth elements, preventing them from being loading aboard ships at Chinese ports, industry officials said on Thursday.

Amid Tension, China Blocks...

The current complaint involves restrictions on rare earths, tungsten and molybdenum, which were imposed by China in 2006 and tightened since then.

“Despite the very clear W.T.O. ruling earlier this year in the first raw materials case, Beijing has not taken steps to remove these export restrictions,” Mr. De Gucht said in a statement. “We regret that we are left with no other choice but to solve this through litigation.”

US, Europe and Japan Escalate...

How can Canada hope to pursue research and development of quantum computers, lasers and entanglement of unbreakable code if they do not totally control the whole REE cycle? It is defined as rare earth exploration, smelting, processing, trade and research. Perhaps the government wishes Canada though to remain a hewer of wood, a drawer of water and a miner of Holmium. In other words, no science, no technology and no development. Is Canada going to "be sure to handle the rare earth issue properly and make the fullest use of our country's advantage in rare earth resources"?

In his current assessment of the Canadian rare earth companies the author favours by far a company called Ucore Exploration. It is a Canadian company under the symbol V.UCU which trades for .28. It really has its act together. The company's reserves and probable resources are located at its Bokan mine in Alaska.

What impresses the author is three-fold. First, they have extensive concentrations of HREE which include Dysprosium, Erbium, Terbium and Holmium. These HREE have application in green technology, high-tech and defence areas. For example, in the defence area, Holmium is used in laser range finders and target designators.


                             HREE are in gold at the bottom

Secondly, they have developed a successful proprietary method to separate Dy and Ho through a firm called IBC Advanced Technologies, Inc. The following description provides details.

"The separation of Next Door Neighbors Dy and Ho is one of the most difficult and time consuming separations for Legacy Separation Technologies. Highly selective, green chemistry separation of the Dy and Ho Sub-Groups from each other replicates previous lab work and makes available the individual separation of Heavy CREE, as desired. The total amount of REE recovered in the Dy and Ho Sub-Groups plus that recovered earlier in the LREE Class plus Sc is, within 1%, the same as the total REE content present in the original PLS. Minimal amounts of REE have been lost to the commons in previous separation steps using the MRT procedure. The recovery of REE at 99%+ by MRT contrasts sharply with recovery rates achievable by Legacy Separation Technologies, where large amounts of the initial REE may be lost as waste in tailings alone. Conservation of REE through the separation process preserves a valuable resource, avoids environmental contamination, and markedly reduces operating and capital expenses."

Thirdly, Ucore announced on March 16, 2017 an option to purchase IBC Advanced Technologies Inc. They have paid USD $650,000 in consideration for the Option. This means potentially that separation methods devised by IBC Advanced Technologies Inc might be applied in other areas such as oil sands or other rare earth projects.

If the Chinese were to purchase Ucore then it could have strong implications for US and Canadian defence. For example, the Chinese might just sit on the mine as they have done with a Canadian indium, tin and tungsten mine. They might charge exorbitant prices for the material which will undergo final processing in China. The material might then be subject to further administration, tariff, environmental or strategic restrictions thus limiting its export to the United States or even Canada. The Chinese might export an inordinate amount to China even if it is not required immediately in order to stockpile it and control the price and market. Furthermore, the Chinese might limit export to Japan and South Korea. Basically, it is a nightmare scenario for the West and its allies with respect to their ability to protect themselves.

The general theme of the series called China's Strategic Acquisition Program is for China to avoid targeting a hard shell  such as the United States in the military and security sense through concentrating on a soft target like Canada. In other words, Canada is the means and the United States is the end. The Chinese have consistently used this method of divide and conquer. Therefore, Ucore is the perfect target in the REE area. It is a Canadian company with a US property.

The Chinese targeted ITF because it was a Canadian company whose expertise resided in lasers which could be weaponized against the US. Potentially, it could restrict US laser development through its patents rather than sell technology to the US. With respect to the Canadian company called Norsat International it could compromise the satellite communication system used by the Pentagon, other military targets and Canadian entities.


                     Upside Down Turtle in Middle of Highway

Therefore, it is logical to assume that the Chinese will target Ucore Exploration as a means to an end whose HREE are of critical and strategic military importance. Basically, Ucore might be regarded metaphorically by the Chinese as a turtle with a soft underbelly comprised of Canadian ownership, weak foreign investment rules concerning small exploration companies, a naive government, provincial control of minerals and no REE policy. Did you notice the Sherlockian dog that did not bark? The Liberal government has no Minister of Rare Earth Elements. Worse yet it has The Hound of the Baskervilles without teeth and without bite.

The ultimate goal of the Chinese is to avoid the hard shell of American military and security concerns. The DOD in the United States is becoming aware of the critical role in which REE's play in the nation's defence and security. It realizes it must develop its own REE resources to break dependence on a potential enemy which has an overwhelming monopoly in REE processing; although, China does not have all the reserves. In other words, the American military establishment is coming to the realization that it must break the REE monopoly as it did the Middle East monopoly of oil by expanding US production of oil and gas or in the REE case by controlling the entire REE cycle.

To their credit the Centre for Operational Research and Analysis of the Defence R&D Canada have recognized the strategic importance of REE, but who in the Defence Department or Liberal government is listening? The Centre mentions that countries like Canada may find it necessary to sell REE to the Chinese. The author though looks at the Japanese who have no resources of REE. He considers it a logical choice to concentrate on the Japanese in terms of strategic partnership, low interest loans, technology, and market.

D.卡尔顿 罗西



Amid Tension, China Blocks Vital Exports to Japan

Keith Bradsher

September. 22, 2010


As China’s Leader Fights Graft, His Relatives Shed Assets

Michael Forsythe

June 17, 2014


Black sludge is pumped into a toxic lake — byproducts of the ingredients that make up most of our technology.

Rowena Ryan



Breakthrough holmium data storage solution piques Matamec’s interest

March 15, 2017

Henry Lazenby

Creamer Media Deputy Editor: North America


China to subsidize rare earths producers




MARCH 26, 2017

NOVEMBER 22, 2012

https://beta.theglobeandmail.com/report-on-business/economy/economy-lab/china-to-subsidize-rare-earths-producers/article5553215/ USGS

China's Rare Earth Industry Open–File Report 2011–1042

U.S. Department of the Interior

U.S. Geological Survey

Pui-Kwang Tse


Chinese satellite beats distance record for quantum entanglement

New Scientist

Daily news

June 15, 2017


Fortunes of Elite

By Bloomberg News

Jun 29, 2012


Is Quantum Entanglement Real?

David Kaiser

NOV. 14, 2014


Defence R&D Canada

Centre for Operational Research and Analysis

China Team

Strategic Joint Staff

June 16, 2016

The Strategic Implications of China's Dominance of the Global Rare Earth Elements (REE) Market

Donald A. Neill

Elizabeth Speed

Strategic Analysis Section


Quantum Computer Technology May Advance Using Rare Holmium Atoms, Scientists Say

Jesse Emspak

November 14, 2013


Matamec Explorations Inc. V.MAT

Rare Earths

What are rare earth elements?


Ucore Separates Dy and Ho Sub-Groups at 99%+ Purity via SuperLig(R)-One Pilot Plant

Investing News Network

July 5, 2016

Xi Jinping Millionaire Relations Reveal

Fortunes of Elite

By Bloomberg News

Jun 29, 2012


U.S., Europe and Japan Escalate Rare-Earth Dispute With China

Paul Geitner

JUNE 27, 2012


Xi Jinping, Rare Earths, Export Quotas and the Confluence of Business and Politics

Tim Worstall , Contributor

June 30, 2012




China's Strategic Acquisition Program

5. Tungsten

a. Predatory Pricing

It could be a clue voiced by the Canadian John Treveky on the gameshow Jeopardy. "This metal resists attack by oxygen, acids and alkalis. At 3410 °C it has the highest melting point of any metal." The answer "What is Tungsten?" might pose a challenge to the audience, but its importance cannot be overestimated. It is critical for a manufacturing industry since without hardened tools and dies manufacturing dies. It is of utmost importance to the steel industry because a steel-tungsten alloy is exceedingly strong. It is necessary to make oilfield and mine drill bits, as well as metal cutting equipment. Think about this for one second. Without these bits our Canadian resource and manufacturing industry comes to a standstill. However, our tungsten mines are idle principally because of the predatory pricing of the PRC--predatory pricing is illegal in the United States and Canada, but not in China. The end goal is strategic acquisition of Canada's tungsten properties.

Recently, the author was clearing out a property for scrap metal. He came across an exceptional hand-made tire iron made of pure nickel. It was saved rather than scraped. He recognized it as nickel because he had processed the metal at the nickel refinery. At head office of INCO he had delivered mail to the department in charge of alloy sales. If the tire iron had been a nickel-tungsten alloy then it would have been one of the strongest man-made alloys. It is presumed that a diamond drill would have had to be used to hollow out the tool by a millwright.

China has a monopoly on tungsten since it produces about 85% of the world's supply. In this respect, China's monopoly resembles it stranglehold on rare-earth elements. China has dumped tungsten on the market at well below cost for between 20 and 30 years in order to control the market. The effect is to put foreign producers out of business.


                        North American Tungsten's Mactung 

The author is aware of China's predatory pricing since he has been a shareholder of various tungsten producing properties. "Predatory pricing is the practice of deliberately setting prices so low that competitors cannot compete, and so are driven from the marketplace." For example, in the 1970's, the author was a shareholder of Canada Tungsten which then later became North American Tungsten (NAT). The author was also a shareholder of NAT. The predecessor was driven into bankruptcy in large part by low tungsten prices. North American Tungsten is currently in the process of trying to restructure. It has the largest tungsten property outside China.



The author has been a shareholder of Malaga (MLG) which had the largest tungsten property in the Americas at its Peru mine. Malaga is also a Canadian company which has been hurt by predatory pricing policy of China. It, too, is trying to restructure.

                                        Adex Mining Inc.

Finally, he owned shares in Adex Mining (ADE) which has a mine in New Brunswick, Canada. Adex is known to own the largest indium deposit in the world. It has the largest tin deposit in North America. It also has large deposits of other metals such as tungsten, manganese, antimony, and REE's. Great Harvest Canadian Investment Company Limited (“Great Harvest”) in October 2010 gained effective control of Adex. Great Harvest is a Hong Kong-based investment company principally engaged in the mineral resource development, mineral trading and marine transportation industries. It seems though its registration has changed to an offshore company. Basically, the Chinese have sat on the deposit. It got the technical expertise to develop the deposits for free. To date, there is scant evidence of any development or job creation.

The Adex properties show diverse mineralization which includes tungsten, molybdenum, indium, zinc, tin, bismuth, copper and REE's. In 2008, China's Ministry of Land and Resources issued guidelines for development of the country's mineral resources for the period 2008 to 2015. They designated tungsten, tin and rare earths as protected mineral commodities; exploration for and production was to be strictly controlled. The production of indium, molybdenum and zirconium and other minor metals must follow the Ministry's guidelines. China had production quotas for tungsten, molybdenum and rare earths among others. It also had export quotas for these metals as well as indium. It is believed the export quota still applies to indium as of the date of this report.


                Japanese coastguard seizes Chinese fishing trawler
                                     on Sept. 08, 2010

The author would like now to draw the reader's attention to a possible correlation which seems to have been missed--at least publicly--between the Senaku Islands incident between China and Japan which resulted in the PRC imposing export restrictions of REE's, tungsten and molybdenum and the private placement at Adex Mining. The New York Times on September 22, 2010 reports that China blocked vital exports to Japan. In October 2010, Adex shareholders approved transactions, including a private placement, with Great Harvest Canadian Investment Company Limited to fund the development of Mount Pleasant.

In the author's opinion, the Chinese were not only blocking tungsten, molybdenum and REE's through export restrictions, but may have been preventing the development of those metals and also indium at the Adex properties at Mount Pleasant, New Brunswick. The Chinese may have realized that the Japanese would probably lodge a complaint under GATT regulations. This would entail a lengthy process and in the meantime the Adex properties might be developed by foreign interests to fill the gap. This may explain to some degree why the Chinese simply sat on the Adex properties or in other words to prevent its development.

"In 2012, the United States, European Union and Japan (complainants) requested consultations with China about its rare earth mineral (tungsten and molybdenum) export restrictions which included export duties, export quotas, minimum export price requirements, and export licensing requirements. To give one an idea of the timeline involved a panel was established on July 23, 2012 and the panel report circulated on March 26, 2014 (followed by an appeal) which ruled against the Chinese export restrictions. This means that for the period between October 20, 2010 to March 26, 2014 the Chinese seem to have effectively blocked development of the Adex properties by others which may have weakened the Chinese "export blockade".

The complainants to the dispute basically claimed that the export restrictions were protectionist. They said that the restrictions protected the Chinese REE, tungsten and molybdenum industries thereby giving unfair advantage to Chinese industry while injuring foreign parties which depended on Chinese exports. It set-up a dual pricing system wherein Chinese industry was given a discount and foreign imports faced a higher price. Ilaria Espa wrote in a paper called Export Restriction on Critical Metals and Minerals that "The use of export taxes and other tax measure such as the withdrawal of Value Added Tax (VAT) determined a situation whereby Chinese companies were paying 31% less for rare earth materials than their foreign competitors in 2008. Yet China's export of rare earth elements de facto created a dual pricing regime leaving China's rare earth processors with a competitive advantage. The same was true for Chinese downstream producers of tungsten articles."

There may be another reason why Adex Mining has not developed the Mount Pleasant site other than Chinese export controls, general investment climate and prices of tungsten. The reason is that ammonium paratungstate is for all intents and purposes priced in Chinese yuan. Jack Lifton who is an expert on REE's and whom the author met about six years ago at a two day seminar along with leading experts in the REE field had expressed the view in 2007 that the Chinese may be waiting for the Chinese yuan to appreciate. This would mean that they could buy all the tungsten or tungsten properties they want from mines such as North American Tungsten (NAT), Malaga (MLG) and Adex (ADE) whose costs would be in $US; although their balance sheets might be stated in Canadian dollars. In effect, this would be another way to achieve a dual-pricing system since their stockpiles and production in China would also be priced in yuan.

One may ask why the Chinese ignored Malaga or North American Tungsten in the autumn of 2010? The reason is that these companies had several things in common during September 2010. First, they were ordering new equipment which meant that they intended to ramp up production to meet additional demand from China. Interestingly, Malaga had just received after a delay of several months high-performance magnets made from rare earths, with a magnetic field three times higher than traditional electromagnets. Second, they had contracts to fill. Third, they were benefiting from higher Tungsten prices which had increased, for example, from MB European APT which had risen 98% from July 2009. This would mean the purchase price of the companies for the Chinese would be outside of their buying range. Then, the Chinese probably realized that there would be too many objections raised by the Americans and Japanese who were facing Chinese export restrictions. It was safe for the Chinese to takeover Adex Mining whose properties had not had an operating tungsten mine for decades and it would be years before tungsten production might start. Finally, according to a Kaiser report MLG had the financial backing of Denver based Resource Capital Funds since May 2010 and an off-take agreement with Global Tungsten & Powders Corp . NAT's bank facilities had been renewed in September 2010 with HSBC including an operating loan facility of up to $8.0 million and NAT was probably considering a private placement and convertible debenture which actually were successfully placed at the end of October.

The Canadian government and provincial regulators allowed the Chinese to conduct a private placement of Adex Mining shares despite US and Japanese concerns over export restrictions on the sale of tungsten. The export restrictions made international headlines so it was not as if the government was unaware of the situation. The author recalls that the Japanese government pressed the Canadian Embassy in Tokyo for assistance in the REE, tungsten and molybdenum export restrictions. The Canadian government must have been aware or should have been aware that the Chinese regulated the production of tungsten concentrates by forbidding foreign investment in tungsten exploration and mining according to a 2011 USGS report. However, neither the federal or provincial government discouraged the Chinese reorganization of Adex Mining.

China is stockpiling tungsten along with other minor metals, minerals and REE's. The purpose is to create a floor price while they prepare for the long term. The Chinese government regards these materials as strategic and critical. On July 19, 2015, China Molybdenum also announced a three billion yuan fund to build a major commercial tungsten reserve.

In retrospect it seems that the reorganization of Adex Mining Inc. in October 2010 was a creeping, strategic acquisition at the very time China had imposed export restrictions while preventing foreign firms from acquiring Chinese tungsten firms. The Chinese did not acquire North American Tungsten nor Malaga during the GATT dispute. However, as a result of predator pricing distorting supply and demand of tungsten along with the GATT decision the price of tungsten has slumped. Currently, NAT and MLG are not going concerns. They will face continuing difficulty to reorganize if the price of tungsten remains low. This means that NAT and MLG are prime targets for strategic acquisition. It means China will continue to protect its overwhelming monopoly in tungsten through predatory pricing while telling the Liberal government not to protect its tungsten industry. Ultimately, the Chinese may be waiting for the renminbi to appreciate so that they can re-establish a dual-pricing system in a different form.

D.卡尔顿 罗西



Adex Mining





Amid Tension, China Blocks Vital Exports to Japan

The New York Times

Keith Bradsher

September 22, 2010


China Loosening its Grip on Tungsten

Tungsten Market Update

Vivien Diniz

July 6, 2012


China may cancel export quotas on tungsten, molybdenum-analysts


Polly Yam

OCTOBER 30, 2014


China Molybdenum tungsten stockpile plan seen creating a price floor at the cost of time

Company's 3b yuan stockpile plan could yield profit but it will take time, analysts say


July 19, 2015



(DS431, 432, 433)

Parties, Agreement, Timeline of the Dispute


China's Quest for Resources

Testimony of W. David Menzie

Chief, Global Minerals Analysis Section, National Minerals Information Center

U.S. Geological Survey, U.S. Department of the Interior

Before the U.S.-China Economic and Security Review Commission

Hearing on "China's Global Quest For Resources And Implications For The United States"


China's Rising Demand for Minerals and Emerging Global Norms

and Practices in the Mining Industry

Jennifer C. Li

Working Paper No. 2 2006


China's stranglehold on tungsten

China's edge on the vital metal is a disadvantage for the U.S.

Commodities Corner Archives, Market Watch

Myra P. Saefong

Nov. 10, 2006


The Economics and Politics of Tungsten Mining Investing in North America

Jack Lifton

December 14, 2007


Malaga may sell Peruvian tungsten assets as financial woes deepen

Creamer Media

Henry Lazenby

May 21, 2013


Malaga recommended as a core proxy for the tungsten sector

Publisher: Kaiser Research Online

John A Kaiser

Nov 1, 2010

Malaga: Corporate Update on Tungsten Production at Pasto Bueno, Peru


September 29, 2010

Malaga recommended as a core proxy for the tungsten sector

Kaiser Research Online

John A Kaiser

Nov. 1, 2010


Management Discussion and Analysis

For the Quarter Ended: December 31, 2010

Report Dated: March 1 2011


Predator Pricing https://www.accountingtools.com/articles/2017/5/16/predatory-pricing

Rare Earth Metals & China

Christopher Blakely, Joseph Cooter, Ashu Khaitan, Iclal Sincer, Ross Williams

Gerald R. Ford School of Public Policy



Chemical properties of tungsten - Health effects of tungsten - Environmental effects of tungsten



U.S., Europe and Japan Escalate Rare-Earth Dispute With China

Paul Geitner

JUNE 27, 2012


USGS 2011 Minerals Yearbook

Tungsten: Advance Release

Kim B. Shedd


The WTO Case Against China’s Export

Restraints on Rare Earths, Tungsten,and Molybdenum

A Perspective from the U.S.

Terence P. Stewart

Law Offices of Stewart and Stewart

March 13, 2012



China's Strategic Aquisition Program

6. Contributions to Politicians and Political Parties

The benefits of China-Australian free-trade in terms of trade is often touted by the Liberal Government in order to bolster their argument for a China-Canada Free-Trade Agreement. The volume of trade between the two countries has increased. However, the gains in trade have been achieved at what cost to Australia's sovereignty, security and democracy if they have been facilitated by "contributions" to politicians and political parties? A partial outline of these contributions is herein provided.

1. Dr. Chau Chak Wing donated $200,000 to a state branch of the Labor Party in Western Australia. He donated $560,000 to the Liberals in 2016. In the past decade, he has given $4 million to major parties.

Chau is a member of the Chinese People’s Political Consultative Conference (CPPCC). While officially separate from the government, detractors say the CPPCC is a sham—a committee appointed to agree with party decisions.

2. Mr. Huang gave a whopping $770,000 in political donations before the 2013 election. Of course, it was merely coincidental that the campaign fundraising came right as the Australia-China trade deal was being signed.

Huang promised the Australian Labor Party a $400,000 donation. But then the Labor Party promised that if elected it would be more aggressive in the South China Sea. Huang canceled his donation.

3. Sheri Yan was arrested in October 2015 for bribing UN General Assembly President John Ashe. She offered him $200,000 to give a guest lecture at a resort which she owned in China. She was married to a former high-ranking Australian intelligence employee, Yan was scrutinized by ASIO. Following a raid on Yan’s home in 2015, they found all sorts of top-secret files on personal devices.

4. Companies linked to Chinese conglomerate Yuhu Group made a donation to then trade minister Andrew Robb's fundraising entity the day the trade deal was clinched.

Bayside Forum, which supports the federal Liberal candidate in the seat of Goldstein (where Mr Robb is set to be succeeded by former Human Rights Commissioner Tim Wilson at the July 2 federal election), accepted $100,000 in donations from executives of Chinese agriculture, property development and infrastructure company Yuhu Group.

In more detail, according to AEC disclosures, Chaoshan No 1 Trust (of which Mr Huang is a director) made a $50,000 donation to Bayside Forum two months later, on the same day ChAFTA was finalised and details announced by Mr Robb and then prime minister Tony Abbott.

Another $50,000 donation to Bayside Forum, this time by Fu Ocean Pty Ltd (whose director Zhaokai Su is reportedly Yuhu's office manager), was undated. And two months after the Hong Kong meeting, $30,000 was donated to the New South Wales division of the Liberal Party. It is illegal for property developers to donate to the NSW branch, but a loophole permits it if the funds are intended to contribute to a federal campaign.

5. Donors with strong links to China contributed $555,000 to the two major parties and fundraising entities in Victoria, a Fairfax Media analysis of Australian Electoral Commission data for 2014-15 reveals.

At least three donors failed to disclose their contributions to the Australian Electoral Commission.

7. Of recent times the Liberal Party has seen $4.4 million of funding withheld by the NSW Electoral Commission because the Liberal Party refuse to tell the NSW Electoral Commission were hundreds of thousands of dollars of funding came from.

8. On February 1, the NSW branch of the ALP revealed its biggest donor, Eng Joo Ang, had given $110,000. The next day Mr Eng told media he couldn't recall it and later that he had not made the donation. On February 12, a late return was quietly published on the AEC periodic disclosures as an "update".

Mr Eng is executive vice chairman of the Australian Council for the Promotion of Peaceful Reunification of China.

9. The Victorian Liberals received $15,000 from the China Australia Media Group, believed to be an arm of the Chinese government. The group has twice been outed for hiring Western journalists at news conferences to ask soft questions of government ministers and officials with the aim of spreading Chinese propaganda.

10. Chinese property developers have also emerged as generous supporters of political parties. In 2013-14, a pair of Brighton property investors with import-export interests Jianping Fu and Min Zhang, donated $200,000 to the Victorian Labor party. Melbourne-based property developer the Ever Bright Group donated $200,000 to the federal Liberal party and Glen Waverley developer Jiandong Huang donated another $100,000.

11. Richard Gu's AXF Group, whose development projects include a massive 5500-home project in the city's west, donated $150,000 to the Victorian Labor party. ZJF Investments, a company owned by property developer Zheng Jiefu (who sought refuge in Melbourne after facing embezzlement charges in China), donated $20,000 to Labor's state branch.

12. Both AXF Group and ZJF failed to make their own donations disclosures to the AEC. Fu Ocean disclosed its $30,000 contribution to the NSW Liberals, but failed to disclose the $50,000 Bayside Forum donation.

13. A report in the Australian Financial Review earlier this month has tied top Chinese developer Guangzhou R&F Properties to an A$100,000 ($71,000 donation) to Australia’s ruling Liberal party last year.

The political gift was submitted by 26-year-old Jiandong Huang (no relation to Huang Xiangmo), who listed only a residential address in Australia. Huang has now been revealed by the AFR to be a relative of Tiger Huang, an R&F operative who was sent to Australia to help the developer set up operations there.

D.卡尔顿 罗西




                               B.C. Liberal Leader Christie Clark

BC Liberals accept foreign donations,
despite ban in parts of Canada

The Globe and Mail

Rafal Gerszak, Justine Hunter and Kathy Tomlinson


March 23, 2017

British Columbia’s governing Liberal Party routinely accepts significant donations from foreign interests – a practice that is banned in many other Canadian jurisdictions.

"If you don't have a residency requirement, you leave the political process wide open to foreign interests affecting what goes on in the province," Mr. Conacher said in an interview. "And their interests are very unlikely to be the same as the interests of voters in the province."

On Saturday, a Globe investigation revealed that the BC Liberal Party collected tens of thousands of dollars in multiple donations from lobbyists who paid under their own names with personal credit cards on behalf of clients and companies and were reimbursed, which is against the law. Elections BC is now investigating.

Some of those 2016 donations include:

Huamulan Developments Inc. gave the Liberals $5,000. It is owned by Beijing Huamulan Investment Ltd., a Chinese company that invests in construction of student apartments near colleges and universities.

Mengfa International Resources Inc. gave $2,800. It is a B.C. registered company. However, its director, Xi Gao, has a Beijing address. Bloomberg Business also lists Mr. Xi as the chairman of Inner Mongolia Mengfa Coal and Charcoal Co. Ltd.

Gukan Construction, owned by Kenny Gu, donated $12,800 last year. Mr. Gu is a real estate speculator who was featured in a Globe investigation last year. At the time, he acknowledged his business is bankrolled by wealthy Chinese businesspeople, who earn their living overseas, while investing in Vancouver real estate.


B.C. Election 2017

BC Liberals have returned more than $174,000 in donations

The Globe and Mail

Sunny Dhillon


April 19, 2017

The BC Liberal Party has now returned more than $174,000 in donations, as the issue of political fundraising again rears its head on the campaign trail and as the RCMP continues its probe of illegal contributions.

The Mounties began their investigation – which is being assisted by a special prosecutor – last month after a Globe and Mail report found some lobbyists made political contributions under their own names and were later reimbursed by clients or companies. Indirect donations are illegal in British Columbia, one of few limits placed on political fundraising in a
province that has come to be described as the "Wild West" of campaign finance.