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FEATURE: Miners scramble to develop rare earths deposits ex-China as demand, prices soar

Highlights

Demand surging from windpower, EVs sectors

Oxide projects considered for US, elsewhere

International mine developers are striving to bring on stream new rare earths projects outside China to secure supplies of the minerals used in electric vehicle engines and wind turbines as prices surge, CEOs of two developer companies told S&P Global Platts.

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China, the principal rare earths miner, also holds at least 85% of the world's capacity to process rare earth ores into material that manufacturers can use, typically oxides, and may in future reduce exports of these materials as its domestic demand grows, they said.

"REEs are both strategic and critical," said Tim Harrison, managing director of ASX-listed Ionic Rare Earths, with a project in Uganda. "A lot of governments globally want to be carbon neutral by 2050, and they're going to need these elements for their offshore wind turbines: if they don't build up stocks they may have difficulties meeting their needs."

Harrison believes governments must become more proactive to secure long-term requirements of rare earth elements. "That will require some form of participation or support for the industry - providing incentives to make sure that capacity exists," he said.

Neodymium, dysprosium, praseodymium, europium, terbium, yttrium and other minerals were labeled "critical rare earth elements" by the US Department of Energy a decade ago, due to their economic importance and potential supply risk.

Originally used primarily in the military, some rare earths have developed numerous applications in magnets in EV engines and wind turbines -- now accounting for an estimated 33% of market demand -- and propelling prices up.

No substitute has yet been found for critical and heavy rare earths -- also known as magnet rare earths -- in wind turbine production and in some military vehicles and weapons, Harrison said. According to Vancouver-based Fundamental Research Corp, each EV requires about 10 kg of rare earth elements. Wind turbines are estimated to use up to 408 kg each.

The price of praseodymium neodymium, a rare earth alloy much in demand for electronic equipment, doubled in just over a year to hit around $117,300/mt in August, according to exchange data cited in a Nikkei Asia report.

Rare earth elements made headlines in 2010, when prices skyrocketed as China restricted exports by around 40% for months to preserve more for its burgeoning domestic market, and to cut pollution. This has not been repeated but the need to establish projects and supplies outside China has intensified in recent years as the energy transition has gained pace.

"The Chinese won't curb exports to the same extent again," maintains Craig Taylor, CEO of Defense Metals Corp, a TSX-listed Canada-based developer of the Wicheeda light rare earths project near Prince George, British Columbia. Such curbs could encourage development of a stronger rare earths industry in the US, he notes. "Still, China's own demand is going to occupy all their [rare earths] production through their [growing] EVs production: they have the entire production chain and they are pretty focused."

Processing in China

Wicheeda, where a prefeasibility study will take place next year, could potentially start up in 4 years' time, producing around 100,000 mt of rare earths concentrate a year in a $200 million investment, with material sent to China for further processing.

Its open pit project is near MP Materials' Mountain Pass, currently North America's sole rare earths producer, and which is mulling the possibility of producing rare earths oxides for magnets production. If this occurs Wicheeda could supply directly to Mountain Pass rather than processing in China: "It's the kind of supply chain the US government would like to have", Taylor noted.

Defense Metals Corp, which has applied to be a preferred supplier to the US Department of Defense, is also eyeing a partnership to produce its own oxide, in an investment of up to $800 million, he said.

Only a handful of projects to produce the more critical heavy rare earths are under development outside China: there are also various light rare earths mine projects. Projects of both types at various stages of development include Northern Minerals' in Australia, Namibia Critical Minerals' Lofdal, Rainbow Rare Earths' projects in South Africa and Burundi, Serra Verde in Brazil and Hochschild's Aclara in Chile.

Ionic's project at Makuutu, Uganda, is a large project containing all the heavy rare earths. A feasibility study may be completed November 2022, with an initial module projected for 2024 start-up to produce 800–1,000 mt/year of rare earths oxide equivalent in the form of carbonate in a $89 million investment, with all carbonate production to be exported to China, currently the sole location where heavy rare earths refining takes place.

"So although we'd be mining outside China, we wouldn't be getting away from China's market dominance," Harrison said.

That dominance may be hard to shake off, despite the new endeavours. Installation of a refinery could come further down the line as Makuutu builds up its planned five modules, but this would not be in Uganda as it would require advanced infrastructure with chemical parks and access to low-cost reagents, Harrison said.