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What on Earth are Rare Earth Elements (REE) and Where Can You Find Them?

In one of his first acts after taking office earlier this year, U.S. President Joe Biden ordered a review of the rare earth supply chain, a group of 17 elements that are increasingly important to modern technology.

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This article was originally published by Financial Post Mining

In one of his first acts after taking office earlier this year, U.S. President Joe Biden ordered a review of the rare earth supply chain, a group of 17 elements that are increasingly important to modern technology.

Used in electric vehicles, solar panels, wind turbines, military defence programs such as missile guidance systems, headphones, motors and many other advanced technologies, nearly all politicians have come round to the idea that they’re critical to the future economy and security.

“I don’t think the average person realizes how deeply rare earths have seeped into the fabric of daily life,” said Ryan Castilloux, an analyst at Adamas Intelligence, a research firm, in Ontario. “They’re all around us.”

The expected growth curve is high. Adamas Intelligence forecasts that global demand for rare earths will increase at a compound annual growth rate of seven per cent through until 2030. Looked at another way, there’s a type of magnet made from rare earths that accounts for 90 per cent of the sector’s value, and it’s predicted to grow even faster at 10 per cent through 2030, from around 62,000 tonnes per year today to 148,000 tonnes per year by 2030.

Some 77 per cent of that growth is tied to increasing demand for electric vehicle traction motors and other e-mobility applications, like electric bicycles, scooters and mopeds.

Analysts say rare earths magnets are so important to electric vehicles because they provide a lighter weight alternative to conventional motors, and can thereby extend a vehicle’s range — a sort of holy grail technology for electric vehicles.

Yet, in spite of much effort and numerous studies, neither the U.S. nor Canada has managed to establish a supply chain of rare earths. Instead, China controls an estimated 70 per cent of rare earths supply and 90 per cent of the complex processing required to transform rare earths into the magnets and powders in which they ultimately end up.

“Biden is making a big push to set up some alternative suppliers,” said Castilloux. “Nothing’s happening anytime soon, but I think within five years or so we could see the beginnings of tangible alternatives.”

Notwithstanding the moniker ‘rare’, North America has vast potential when it comes to rare earths. Canada is home to an estimated 830,000 tonnes of rare earths reserves, and explorers in nearly every province have identified a potential deposit that could be mined.

In 2020, Canada and the U.S. finalized a joint action plan on critical minerals, including rare earths, which calls for increased cooperation on developing supply chains, research and development and support for industry.

But the pathway for taking rare earths out of the ground, separating, refining and ultimately placing them into products is long and complex.

Extracting ore from the ground is first. Next, the rare earths must be separated from other elements, itself a complex process that sometimes requires dealing with radioactive material. Third, the rare earths have to be separated from one another. A third step requires processing the individual rare earths into oxides, which can be further processed into powders. There is still more stages in which these intermediate products are converted into magnets or eventually motors, and inserted into products.

Investors have always hesitated to finance a mine when the commercial market for its ore is limited. Likewise, it’s been to difficult to raise money to process rare earths, without a secure supply.

“Who would invest in a rare earth mine with no access to a downstream facility to create value-added rare earth products?” Pierre Gratton, chief executive officer of the Mining Association of Canada said to Parliament earlier this year. “Who would invest in a value-added manufacturing facility when there is no upstream mine to source from?”

No one would, Gratton quips, but that may be changing, albeit slowly .

In September, the Saskatchewan government announced $35 million for a first of its kind in North America processing facility in Saskatoon, which would convert rare earths into oxides. It is scheduled for completion in the fall of 2022.

Analysts said it also helps that one of the largest rare earths mines in the world is already operating in California, near the Nevada border. It has been sending its ores to China, although there are plans underway to build processing facilities in the U.S.

“Having that mine production in the U.S. is a great first step because it helps solve the chicken and the egg issue,” said Castilloux.

Elsewhere, there’s other signs of progress. In the Northwest Territories, around 100 kilometres east of Yellowknife, Cheetah Resources Corp. is planning to mine small amounts of rare earths from its Nechalacho project, believed to be the first project in the country where an Indigenous group is contracted to operate a mine in its own territory.

The product is expected to travel by barge to Hay River, and from there to Saskatchewan before heading to Norway for further processing.

“This is not going to be easy,” said Ian London, executive director of the Canadian Critical Minerals and Materials Reliance. “But there’s growing confidence that it can be done.”

Plus, there are other projects in the pipeline. Outside Montreal, Geomega Resources Inc. has opened a pilot plant that is recycling small amounts of rare earths and there are numerous explorers advancing various projects around the country.

The biggest rare earths company here, Neo Performance Materials Inc., is not a miner and has no operations in Canada. But it is headquartered in Toronto, and has a growing business making magnets with major facilities in Estonia, Thailand and China.

 A Neo Performance Materials facility in Tianjin, China.

In the past year, its stock has risen from $7.26 to $17.15 as of Friday, and it recently announced a deal with U.S.-based Energy Fuels Inc., in which it will process rare earths that are extracted from the earth as a byproduct of another mining operation — creating a new low-cost source of feedstock.

“The world is undergoing an economic transformation, with innovative technologies, clean technologies, driving the pace of change,” London told Parliament earlier this year.

London testified to the Standing Committee on Natural Resources in the House of Commons in February that by gaining control of the rare earths supply chain, China was able to create millions of jobs and boost its ability to manufacture various products, from refrigerators to washing machines. While it’s often discussed in security terms, he argued establishing a supply chain may require upfront investment but would ultimately pay off for the economy.

“The risk of not doing it is that there also goes the technology — the high-tech jobs and high-tech schools and programs,” said London.

Financial Post

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Energy & Critical Metals

Pilbara Minerals Reaches Records Prices for Lithium Spodumene

Pilbara Minerals’ (ASX:PLS) third auction on the Battery Material Exchange (BMX) digital platform for 10,000t (SC5.5%) spodumene went off at a record…

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Pilbara Minerals’ (ASX:PLS) third auction on the Battery Material Exchange (BMX) digital platform for 10,000t (SC5.5%) spodumene went off at a record $US2,350/t.

It outshines auction two on September 14, which went off at a then-incredible $US2,240/t to singlehandedly spark a historic 86.5% month-on-month increase for average spod pricing industry-wide.

The average price for SC6% cargoes this time last year was ~$US380/t.

In the December half of 2020 – when pricing was still weak — Pilbara Minerals sold 114,239t of spodumene concentrate in contracts for revenues of ~$59m.

It has now raked in ~$US54m alone from these three spot cargoes totalling 28,000t.

“As with the previous two auctions, strong interest was received in both participation and bidding by a broad range of buyers,” Pilbara Minerals says.

“Parties placed 25 bids online during the 45-minute auction window, with the Company considering the bidding to be very strong in light of the deferred delivery date.”

 

 

The post Pilbara Minerals just sold the most expensive cargo of lithium spodumene ever appeared first on Stockhead.

Author: Reuben Adams

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Energy & Critical Metals

Hyliion’s Unique Bet on the Future of Trucking

Hyliion (NYSE:HYLN) is one of the flood of electric vehicle (EV) SPACs that emerged over the past year. HYLN stock, like its peer group, has also had a…

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Hyliion (NYSE:HYLN) is one of the flood of electric vehicle (EV) SPACs that emerged over the past year. HYLN stock, like its peer group, has also had a rough run in 2021 after the initial price spike.

Source: Muratart/Shutterstock.com

Unlike most of the EV companies, however, Hyliion has a unique vision. Rather than aiming to build its own EV brand from the ground-up, Hyliion is working on niche solutions to enhance the already-existing trucking industry. It aims for incremental improvement rather than reinventing the wheel.

So, will Hyliion’s new approach find commercial success?

Hyliion’s Products

Currently, Hyliion is working on a few different items to improve trucking efficiency. The company makes powertrains, which can be added to trucks. These are intended to capture power as a vehicle rolls downhill. That retained power charges a battery, which can help assist the vehicle once it needs energy again. However, the high $25,000 sticker price for HYLN’s product counteracts the fuel savings; so far, demand has been limited.

Hyliion is also working on battery packs. However this is a competitive field where it may not have a significant advantage.

The firm’s most promising item is the Hypertruck ERX. This is a unique product. It offers a truck a dual-powered system that runs on both a battery and a natural gas engine. For shorter-trips, it goes purely off the electric battery, offering clean emission-free driving. It has built-in features such as regenerative braking to help conserve and maximize power from the existing battery as well.

Once the vehicle goes beyond its range, however, it switches to using the on-board natural gas engine. Natural gas is much cleaner than diesel. Historically, it’s also been much cheaper, though that’s currently under question given the ferocious rally in natural gas prices over the past few months. Regardless, historically, there’s been a considerable amount of interest in using natural gas for trucking.

A combination natural gas/battery engine could be a best-of-both-worlds solution. It offers many of the efficiency and environmental benefits of electric, while having a much larger range thanks to the natural gas backup. Additionally, it gives trucking companies a relatively simple way to improve their business and improve their environmental profile without having to totally overhaul their whole fleet.

Is There Demand for This Solution?

There’s a bearish talking point on HYLN stock is worth considering. Simply put, there are dozens if not hundreds of companies in the EV space, with many of them focusing on trucking in particular. Yet Hyliion is the only one—or at least the only public one—pursuing this sort of hybrid approach.

Thus, one can reasonably suggest that Hyliion’s solution simply isn’t that promising . The existing trucking industry has operated as it has for decades. It may take a total rethinking of trucking from the ground up to disrupt the existing supply chain. Even if Hyliion can produce incrementally better results, that may not be enough to move the needle.

More broadly, there is a dilemma so many SPAC firms find themselves in. They have little in the way of profits or even recurring revenues yet. So, investors have to believe in the story to maintain their confidence in the firm. That certainly applies to HYLN stock, which has generated minimal revenues up to this point. The company does have a decent balance sheet and a number of pre-orders. Still, it will take more time to see if Hyliion can convert its potential into tangible results.

HYLN Stock Verdict

Hyliion is doing something different. You can argue that either way. Bears say no one else is pursuing this path because it is unlikely to garner much commercial interest. And that’s a fair argument.

On the other hand, there are way too many generic EV companies with a spiffy-looking prototype vehicle and little else. You might have better odds taking a chance on a company that is trying to advance a practical—albeit less flashy—solution to a widespread problem.

Hyliion lacks a lot of glamour you’d find in other EV companies. Relying partly on natural gas fails to check certain environmental, social and governance (ESG) boxes as well. However, if the company can deliver on its promises in terms of efficiency and cost savings, that other stuff shouldn’t matter too much. Hyliion still has to prove out that potential commercial demand. But the concept makes a lot of sense, and the valuation isn’t too demanding at this price, either.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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Author: Ian Bezek

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Energy & Critical Metals

Cypress Development kickstarts its pilot plant program

 
Cypress Development (CYP.V) has completed the assembly of the pilot plant which will be used to test the metallurgical characteristics of the Clayton…

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Cypress Development (CYP.V) has completed the assembly of the pilot plant which will be used to test the metallurgical characteristics of the Clayton Valley Lithium project in Nevada. The outcome of the pilot plant program will be very important as Cypress will be testing the use of a chloride-based leaching process in combination with the Chemionex-Lionex process for direct lithium extraction.

This approach worked on a smaller scale basis and the pilot plant program could be seen as the moment of the truth. The flow sheet seems to make sense, and could perhaps mean a breakthrough for clay-hosted lithium projects as the sector will for sure be moving towards a ‘cleaner’ approach to recover the lithium versus the classic acid leaching processes. A successful outcome will further de-risk the project, and the subsequent feasibility study may show superior economics if the company uses a slightly higher lithium price compared to the PEA and PFS studies. Keep in mind the current market price for lithium carbonate exceeds $20,000 per tonne and if that price would have been used in the PFS, the NPV of the Clayton Valley project would have been substantially higher.

The pilot plant programme comes very timely as this appears to be the right time to consider developing a lithium project in North America as the economics will for sure be underpinned by a strong lithium price.


Disclosure: The author has a long position in Cypress Development. Cypress is a sponsor of the website. Please read our disclaimer.

Author: CR Team

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