The ongoing saga of bringing Molycorp’s Mountain Pass facility into cost-efficient production demonstrates that a deposit’s grade alone is not a sufficient nor, I think, even a necessary metric for success in the rare earth sector.
It cannot be overemphasized that it is, and always has been, obvious that there is not just one unified market governing all of the global transactions in rare earths. There are in fact divergent markets not only for the individual rare earths but also for certain, end-use defined, combinations of them. Therefore the idea of valuing a rare earth deposit by calculating a “basket” price based on the total “value” of the individual rare earths present in the ore body is misleading in the extreme, because it is usually done as a gross valuation calculated from “posted individual prices” and from the amounts of each rare earth element determined to be present in the deposit. The fabrication of the final form in which each rare earth or combinations of rare earths are sold, and the differences in cost of separating, purifying, and compounding them are ignored in “basket prices” even though such costs markedly reduce the initial value of the individual rare earths in the deposits. The value of the typical “ore concentrate” in the feasibility studies I have seen is thus, in my opinion, typically too high, and the discounts stated as given by traders and refiners are often understated.
Analysts working for professional investors seem to have belatedly recognized these facts and are moving the goal posts to reflect the (actual) separation of the rare earth markets into three basic markets, those of the light rare earths, the light rare earth elements (LREEs); the mid-range rare earths, called the SEGs (Samarium-Europium-Gadolinium); and the heavy rare earth elements (HREEs). These divisions are, in fact, man-made, because nature doesn’t provide us with rare earth bearing deposits that respond to chemical or physical separation processes by simply dividing into the above categories or being easily divided into them by further processing.
The three rare earth markets really identify the rare earths by their relative abundance in nature. The first four rare earths, lanthanum, cerium, neodymium and praseodymium, the LREEs, typically constitute the majority of the world’s largest and highest grade rare earth rich deposits. I have put together the following chart from the data set provided on the web site for the Technology Metals Research, LLC:
- Lynas Corporation Limited – Lynas
- Molycorp, Inc. – Molycorp
- Rare Element Resources Ltd. – RER
- Tasman Metals Ltd. – TAS
- Texas Rare Earth Resources Corp. – TRER
- Ucore Rare Metals Inc. – Ucore or UCU
I have added a fourth category, Y, the element yttrium, because it is always conflated with the HREEs, which masks the fact that in every case it, Y, is the major HREE, by volume, in that market. The most important of the non-Y, HREEs today, are Terbium, Tb, and Dysprosium, Dy. The total global new legal production of these two elements is less than 2000 metric tons per year of which ¾ is dysprosium. I believe that if it were not for Chinese recycling of industrial magnet manufacturing scrap and of fluorescent lamp phosphors from end-of-life and industrial processing scrap that both Tb and Dy would be in short supply and that without new supplies of both from outside of China there will be no way to dent, much less compete, with the Chinese near monopoly in the manufacturing of rare earth permanent magnets or to increase the supply of lamp and display phosphors made outside of China. In the case of Yttrium, Y, China’s dominance today in its production is total. Y must also be produced outside of China in the near future if there are to be any non-Chinese total rare earth supply chains constructed.
The world’s two most imminent undeveloped rare earth total supply chain regional opportunities are North America and Western Europe. Both have existing skills sets or operating components, which could be enlarged to, or in the case of Europe engaged with, end-user product manufacturing by being anchored upon, regionally, domestic combinations of the mines and junior mining companies above. I place Lynas in this group, because it is able to freely export its output from Malaysia, which is one of the most democratically and free market oriented countries in Asia.
Clearly Europe has only one choice, Tasman, as an anchor for a total domestic European, rare earth supply chain. There are other deposits on that continent that could be developed but Tasman is the best.
The future siting of any rare earth total supply chain outside of China will require a reliable and significant, in terms of output, source base for the SEGs and the HREEs in particular. There is no mass- produced-technology inhibiting shortage of sources of the light rare earths anywhere in the developed world. The problem inhibiting the economic production of rare earths everywhere is the fact that the most common of all of the rare earths found in any and every deposit is cerium, which is also the least useful of the rare earths. Even if we accept that it is a critical material in Fluid Cracking Catalysts and the wash coats for exhaust emission catalysts its actual demand is much less than even today’s annual production just from China. Cerium’s use in the polishing of optical glasses and as a component of the chemical makeup of the glass is substitutable, and is in almost every case of consumer products very price sensitive.
It is the HREEs, Y, and the SEGs that are critical in so many technologies, and it is the sustained and reliable supply of these that is the key to a total rare earth supply chain.
A study of the relative ease of the chemical separation of the individual rare earths from each other shows a very different ordering from that of the simple three markets described above. Such a study reveals immediately the core problem: It is that the overall cost of such separation is mostly due to the cost of removing the light rare earths from the process leach solutions. If we look at the business cases of Molycorp and Lynas, as an example, the problem glares out at us. Each company has spent one billion dollars or more to build a separation facility to process 20,000 tons per year of just LREEs individually and in customer end-use specified combinations. The real value of their outputs is in the didymium (the “natural mix of undifferentiated praseodymium and neodymium) they produce. “Didymium” is today just shorthand for the natural mix of Pr/Nd that each mine produces when it doesn’t separate the Pr from the Nd. This mix is produced mainly for economic reasons. Magnet makers can use the mix, because although praseodymium is not as good a material as neodymium for the purposes of making sintered NdFeB magnets it is more expensive than it would be worth to separate the Pr and Nd from each other just to produce sintered magnets. For bonded magnets it is a different story and for those the added expense of a Pr/Nd separation step is required. Bonded REPMs however are only a small fraction of the total production of magnets of the NdFeB type.
The table above shows that the choice of which deposits to develop to anchor a total rare earth supply chain should be made on the basis of the distribution of the TREEs contained. The other key factors to be considered are:
- Grade and the extent of the deposit,
- Radionuclides contained,
- Ease (cost, safety, and containment) of extraction of the desired REEs from the radionuclides, and
- Cost of separation/purification of the desired REEs from all of the contained REEs and non radionuclide contaminants (Fe, Al, F, etc)
Note well that factors 2 and 3, and, lately,4 more and more are coming to trump factor 1 due to advances in our understanding of the chemistries of:
- Ore leaching (called the “metallurgy” in mining engineering), and of
- Mineral beneficiation (concentration), and of
- Rare earths’ separation from each other as well as of the chemical engineering issues arising from scaling up such chemistries to production levels.
China today produces 90-95% of all of the world’s supply of SEGs, HREEs, and Y. The balance is produced outside of China but almost entirely refined in China. A small proportion of the global production (perhaps 1-2%) of SEG, HREE, and Y bearing concentrates is separated and purified by Belgium’s Solvay Corporation at its operation in France.
The Chinese production of SEGs, HREEs, and Y is done by heap leaching enormous volumes of low grade (less than 0.25%) ionic adsorption clays using mildly acidic reagents. China has no hard-rock deposits of HREEs, and Y, that can be processed more economically. The table above shows that the USA has not only significant hard rock deposits containing SEGs, HREEs, and Y, but also a very large deposit of fine grained material in a porous refractory matrix than can be extracted easily and has the highest proportion of SEGs, HREEs, and Y of any deposit known with the exception of one or two Chinese “clays.” I cannot overemphasize that practice has proved that it is not grade that is important in the production of the rare earths from mines but rather the proportion of the total rare earths contained that is made up of critical rare earths.
In my opinion the ideal American total rare earth supply chain would be anchored upon LREEs from RER, SEGs from RER, UCORE, and TRER, and HREEs (and Y) from RER, UCORE, and TRER. Such an entity could even utilize a single central separation/purification facility, and would then in-gross require the least investment in mining construction as well as in separation and purification. I think that a case can be made that the total investment in such a combination would be altogether less than has already been spent at Mountain Pass just to create a potential oversupply of LREEs.
The ideal American TRESC would be able to easily supply US demand and be able to ramp up to meet export opportunities.
The skill sets to erect and operate rare earth metal and alloy operations and to resume the manufacturing of rare earth permanent magnets from domestic feed stocks are abundantly available in the USA. What is missing is a reliable secure sufficient supply of critical rare earth starting materials.
The necessary skill sets also exist and, much more so than in America, operate today in Europe. For a TRESC to be sited in Europe it will be necessary that Tasman Metals be the SEG, HREE, Y anchor and that a European source of LREEs be found. I think that either Lynas or perhaps a North American entity would be well suited to this purpose.
North America and Europe are today the main destinations for rare-earth enabled mass produced products. The TRESC for this exists today only in China. China’s costs and domestic demand are increasing while its supplies of critical rare earths are decreasing for various reasons many of which are permanent barriers to future production increases.
The time to address the problem of security of supply is now. The future is rapidly approaching, and if it has the same supply/demand scenario for rare earths as exists today then the future of this industry will remain under China’s control.