U.S. Rare Earths becomes the first American underground REE miner to remove rare earth material in decades
U.S. Rare Earths (‘USRE’, OTCBB: UREE ) is, by all effects, the first American rare earth company, operating an underground mine, to have extracted actual rare earths minerals in the past few decades. USRE has started to remove and use an estimated 300 ton stockpile of pre-mined material, located on its Last Chance prospect after securing all relevant permits from the US Department of Energy and State authorities in Idaho. The historical data for the stockpile is very promising and carries very little risk, compared to other projects because the stockpile operations vastly reduces CAPEX and OPEX costs to relatively insignificant values and because the upside is very enticing: data from the U.S. Department of Energy’s Critical Materials Strategy, suggests the stockpile is rich in high demand europium as well as heavy rare earth elements especially dysprosium and neodymium among others. USRE will perform the relevant metallurgical testing of the stockpile to confirm the very promising historical data, which points to a significance presence of – among other REE’s such as dysprosium – europium, a rare earth essential in providing the colors used in applications such as smart phones and CFL light bulbs. Europium (Eu) is one of the keys to understanding USRE’s value; indeed, this metal has been consistent in maintaining a high price.
The US and the European Union have classified Eu as a critical material and there is great concern for potential shortages because of its widespread, and growing, use by the lighting and display systems side of the electronics industry. Europium is used in the phosphors (light emitting materials that gives color TV its red hue; they are also used in fluorescent bulbs, lamps, TV and computer monitors and has also been used to mark the ‘trim’ of Euro denominated bills in Europe.One of the growth areas will be in commercial lighting applications from developing countries and, in fact, the price of europium is high compared to other REE. The much touted recycling of rare earths (a very popular solution on paper) is very far from offering a realistic alternative. Should REE recycling technology even develop at an industrial scale able to address global demand, it is estimated that the share of rare earth recycling by 2020 will still account for just 10% of supply. The supply situation for critical earths is quite literally ‘critical’; the demand for europium, terbium and dysprosium exceed the supply on offer. The demand for wind turbines, solar panels and other REE intensive technologies has gone up in the wake of rising energy costs (notwithstanding the current oil price lull).
At the moment there is virtually no place where the critical and heavy rare earths are being processed into something useful except for China. Molycorp and Lynas Corp are processing outside of China (California and Malaysia respectively) but, so far, this activity has been limited to light rare earths (LREE). In the U.S. and in the rest of the world there is high pressure to develop new deposits and new processing facilities as China’s production share has started to drop in response to some new capacity and – mostly – to internal restrictions related to intensifying environmental controls. China’s export policy is an ongoing point of contention between Beijing, Washington and others before the World Trade Organization, which recently confirmed that Chinese export restrictions on rare earths, are illegal. Yet, nobody has offered any alternative to the processing of rare earths even while China’s share of the global production is expected to drop significantly if the government continues to enforce tougher environmental regulations affecting both the extraction of the raw materials and their transformation into marketable products.
USRE is one of the companies outside of China presenting itself as a comprehensive critical rare earth supplier from mining to processing. In 2013, the Company reported very aggressive drilling results thanks to the strategic use of historical data and the application of new technology. Very favorable exploration results led the company to expand its land claims to around 25,000 acres in several states including two Central Park-sized properties in accordance to data indicating the presence of very high percentages of critical rare earths. The very fact that USRE would undertake property expansion in the middle of a difficult market – as 2013 was – suggests that there is a very good reason for doing so. Indeed, in late 2013, USRE also completed a successful USD$4 million private placement even as several other companies were competing for far smaller sums. USRE can rely on a very experienced management and exploration team with many and successful years of experience in the sector and their determination to create an wholly American complete supply-chain solution, which will include a separation mill for the critical and heavy rare earth elements in the continental United States.
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Adrian Nixon is a Senior Editor at InvestorIntel. He began his career as a scientist and is a Chartered Chemist and Member of the Royal ... <Read more about Adrian Nixon>