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China Creates One Rare Earths Company to Rule Them All as USA Focuses on REE Processing

China recently flagged plans to create a rare earths giant, combining three state-owned enterprises (SOEs) into one company…

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This article was originally published by Stockhead

China recently flagged plans to create a rare earths giant, combining three state-owned enterprises (SOEs) into one company which would have a 70% share of the country’s domestic production.

Minmetals – China Minmetals Corporation’s (CMC) rare earths subsidiary – said its parent was planning a strategic restructuring of rare earth assets with another state-owned firm, Chinalco, and the government of the city of Ganzhou.

It comes as the US pushes hard to create an alternative supply chain for rare earths used in the production of high-performance magnets for EVs, wind turbines and for military applications.

But Ionic Rare Earths (ASX:IXR) managing director Tim Harrison said the move wasn’t unexpected; in fact it’s been on the cards for some time.

“It’s something we’ve been expecting, and from what we can see, it’s about making sure that the infrastructure, the facilities are brought under one umbrella to try and get the inefficiencies out of the supply chain,” he said.

 

 

Considering its own refinery asset

Ionic signed an MOU with Chinalco earlier this year for the development of and potential offtake from its Makuutu rare earths project in Uganda.

But the company is considering developing its own dedicated rare earth refining asset at Makuutu.

“We spoke with all of the rare earth players, all of the six SOEs and in the end selected to move ahead with China Rare Earths and Chinalco because of their position as the largest market capitalised leader in the processing of medium and heavy rare earths,” Harrison said.

“But we’re also looking at the longer term potential of developing our own rare earths refining operation where we see the opportunity for the company to place our products into new and developing supply chains.

“There’s also the opportunity potentially to go further in the rare earths supply chain, and to be a greater participant in developing an alternative and secure and traceable rare earth market.”
 

North American players are teaming up too

The US and Canada are also making moves to consolidate in an effort to build downstream processing capabilities for rare earth separation, metal and alloy making, magnet making, and end use manufacturing – and reduce reliance on China.

Rare Earth giant Lynas (ASX:LYC) is ahead of the pack, having signed a deal with the US Department of Defense in January to build a commercial light rare earths separation plant in Texas.

But more recently, Canadian rare earth junior Search Minerals entered a non-binding MOU for offtake of 500 tonnes per annum of neodymium/praseodymium (NdPr) from future production to one of its investors – USA Rare Earth LLC – whose NdFeB magnet plant would produce 2,000 tonnes annually of high-performance rare earth magnets.

And Aussie stock Vital Metals (ASX:VML) has entered into an MOU with Canadian rare earth processor Ucore Rare Metals (TSXV:UCU) to supply ore from its operations – with first production expected in June 2022.

The ore will be processed into a mixed rare earth carbonate in a facility funded by Canada’s Saskatchewan Research Council in Saskatoon, Saskatchewan, and then shipped to Ucore’s proposed processing centre in Ketchikan, Alaska, USA, for separation into individual rare earths.

 

Supplying feedstock to Europe and US

Vital Metals managing director Geoff Atkins said at the time the MOU was “an important and exciting entrance into the North American downstream rare earth supply chain.”

The company already has an offtake agreement in place with Norway’s REEtec As, and just increased this 50% to a minimum of 750 tonnes NdPr contained within 2,000 tpa total rare earth oxides (TREO) with a maximum of 25% cerium.

“This agreement, together with our binding off-take agreement with REEtec, will help position Vital as a critical supplier of rare earth feedstock into both the European and North American markets,” Atkins said.

“We are continuing to grow our operations in Canada and are well-placed to supply both geographies with the complete suite of rare earths,” Atkins said.

And the UK is also jumping on the bandwagon, with a government-funded feasibility report due to be published in the coming days which will detail the steps needed to revive domestic production of rare earth magnets by 2024.

 

American Rare Earths partnering at the pointy end

Another player in the US is American Rare Earths (ASX:ARR). It’s already developing the La Paz project and has just announced plans to kick off drilling at its Halleck Creek project early next year.

Director Keith Middleton said the company believes Halleck Creek has the potential to be significant, “certainly in the hundreds of millions of tonnes of rare earth mineralised rocks at a significantly higher grade.”

And with America looking for alternative supplies, the company reckons it has the low penalty element advantage with a range of potential partners who are on the pointy end of developing processing technologies in the US.

“There’s a universal understanding that America want to develop their own processing capability,” he said,

“And our partners are applying their proprietary techniques in order to demonstrate the ability to liberate the rare earth elements from within the host material.

“For us it’s a bit like backing every horse in the Melbourne Cup.

“We’re not really fussed which get grant funding or however many develop the proprietary techniques, because what they’ll effectively be doing is using our feedstock in order to prove their methodology.

“That potentially makes us at the epicentre of the new technologies that are being developed.

“We believe that we’re incredibly well positioned to supply feedstock into that supply chain as that processing capability is developed,” Middleton said.

“We believe that they will succeed and that will run in a parallel stream as our projects evolve.”
 

On-shore processing could be just three years away

Middleton said he believes that the US could develop on-shore processing in the near future.

“I’m absolutely convinced that that processing capability will be developed on shore in the next 3-5 years and certainly well before 2030,” he said.

“Because no one wants to be beholden to a third party, look at the trillions of dollars that are now being invested in this sector.

“The US needs 10 times the amount of rare earth metals that it currently has to meet Biden’s tech plans by 2030 and it needs between 20-25 times more to meet the needs of the green economy and the military.

“With trillions of dollars being diverted from fossil fuels to develop this industry, how quickly can it evolve? I think incredibly quickly.”

 

At Stockhead we tell it like it is. While Ionic is a Stockhead advertiser, it did not sponsor this article.

The post China creates one rare earths company to rule them all as America pushes for processing capabilities appeared first on Stockhead.

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