Rare earths march towards supply diversity

By
Published: Tuesday, 03 July 2012

As China continues to hold the whip hand on rare earths, so the need to develop new sources becomes ever-more critical, as Gerry Clarke reports

Three decades or so ago, the rare earth minerals were exploited by relatively few companies for traditional uses such as lighter flints, using the mixed rare earth alloy mischmetal; fluid-cracking catalysts for oil refining, using rare earth chlorides; and polishing powders, using mainly cerium oxide. But, the writing was on the wall for an increasingly high-tech market future. Sophisticated individual rare earth element (REE) applications were just starting to be recognised, although China was not then a factor in the market (see Rare Earths: Industry Profile and Market Review, Industrial Minerals, March 1979 by Gerry Clarke).

 
 Molycorp’s Project Phoenix is scheduled to complete
its two-phase modernisation programme at Mountain
Pass by the beginning of 2013
Molycorp Inc.
Today, and as has been the case for some time, China is the factor in the market. REE are on critical lists for future supply risk and for their so-called clean energy credentials, along with certain other industrial minerals such as antimony, fluorspar and lithium. For five of the so-called heavy rare earth elements (HREE), they are regarded as most critical today and through 2025 (see table). Estimated forecasts showing global demand increasing by 50% over five years from around 105,000 tonnes total rare earth oxide in 2011 to some 160,000 tonnes in 2016, might be sufficient cause for concern in itself.

But what confirms criticality is the fact that not only has China become a virtual supply monopoly, accounting for up to 97% global demand, from virtually nothing three decades ago, China also consumes about two-thirds of its production. And China, highly contentiously, reduced export volumes by an unexpected 40% in 2010 through its quota system, which has now evolved further by also linking export - and production - quotas with pollution control compliance and strategic resource conservation policies. The result was stratospheric price peaks for all REE in 2011 and, for many end uses, flight to substitute materials and consequent precipitate reduction in demand. Prices have since ameliorated.

An exploration boom already in progress gained further impetus as recent price volatility rattled concerns for future supply security. However unlikely it may seem, around 400 commercially interesting REE occurrences and projects, mostly in early stages of recognition, are documented with up to 40 or so at varying stages of advanced exploration and development. This demonstrates that these elements, as a class, are not particularly rare, but in appropriate concentrations for successful exploitation at this time, they are far more so. They are intensely capital absorbing in their development and exploitation.

A basket case in need of cracking

From the outset, it is essential to appreciate that the 18th Century term, rare earths, coined by Finnish chemist, Johann Gadolin, has only historic significance. Given today’s wide audience interest, well beyond the scientific community, the historic term for the 15 elements group is unhelpful as it suggests all are equally rare (untrue), earthy form (untrue), characteristic similarity (partially true), and that members of the group may be commercially assessed on that basis (big mistake).

Given today’s technological sophistication, and supply and demand dynamics, it is essential to consider REE on an element-by-element basis rather than as a group. Nevertheless, the rare earths term persists refined into the sub-classes of light (LREE), medium (MREE) and heavy (HREE) rare earths reflecting a degree of natural differentiation and relative rarity status. Only certain of the HREE are truly rare.

Because these elements are so similar in size (see table), Nature’s processes failed to differentiate each of them into separate mineral species amenable to classical beneficiation.

The ore minerals of bastnaesite, monazite, xenotime, loparite, eudialyte and certain others among more than 200 rare earth mineral species, provide crystal structures in which all 15 elements may occur in frustratingly different proportions from one occurrence to another, and not in proportions conveniently matching demand characteristics.

However, there is some differentiation between LREE and HREE between minerals with bastnaesite (REFCO3) and monazite ([RE,Th]PO4) accounting more for the LREE group, while xenotime (REPO4) carries more of the HREE. But there is little further predictability regarding REE proportions from deposit to deposit.


 

The Rare Earth Elements (REE)

ELEMENT

Chemical

Atomic

Atomic

Ionic 3+

Crustal

 

Symbol

Number

Weight

Radius

Abundance

Light REE

 

 

 

 

ppm by wt

Lanthanum

La

57

138.91

1.04

34

Cerium

Ce

58

140.12

1.02

60

Praseodymium

Pr

59

140.91

1.00

   8.7

Neodymium

Nd

60

144.24

0.99

33

 

 

 

 

 

 

Medium REE*

 

 

 

 

 

Samarium

Sm

62

150.36

0.97

  6

Europium

Eu

63

151.96

0.97

  1.8

Gadolinium

Gd

64

157.25

0.94

  5.2

 

 

 

 

 

 

Heavy REE

 

 

 

 

 

Terbium

Tb

65

158.93

0.89

  0.94

Dysprosium

Dy

66

162.50

0.88

  6.2

Holmium

Ho

67

164.93

0.86

  1.2

Erbium

Er

68

167.26

0.85

  3

Thulium

Tm

69

168.93

0.85

  0.45

Ytterbium

Yb

70

173.04

0.81

  2.8

Lutetium

Lu

71

174.97

0.80

  0.56

Yttrium*

Y

39

   88.91

0.97

29

 

 

 

 

 

 

Comparison

 

 

 

 

 

Antimony

Sb

51

 

 

  0.2

Cobalt

Co

27

 

 

30

Copper

Cu

29

 

 

68

Gold

Au

79

 

 

  0.003

Iron

Fe

26

 

 

63,000

Lead

Pb

82

 

 

10

Lithium

Li

   3

 

 

17

Molybdenum

Mo

42

 

 

  1.1

Nickel

Ni

28

 

 

90

 *Though not a lanthanide series element Y, and sometimes scandium (21), is included as

a rare earth element as certain similar properties, including occurrence, owe to it being

in the same Group of the Periodic Table of Elements. Naturally radioactive promethium

(61) is exceedingly scarce and so not relevant. Rare earth elements in red are regarded

as most critical in terms of future supply (CREE).



The rare earth elements

Another complicating feature is the presence of the radioactive element, thorium, in monazite and the association of some deposits with uranium. It is a major plus point where REE mineralisation is free from U and Th, as are the low-grade clay deposits found in southern China formed as the result of weathering processes that caused some further differentiation of elements in favour of HREE adsorbed onto the clay mineral surfaces.

These deposits account for most of HREE production today. Tomorrow, more of the HREE may come from hard rock ores as well as tin and uranium residues, with phosphate ore residues also holding promise for the future.

The REE story is like no other among the Earth’s mineral resources. It is a fiendishly complex business from start (resource characteristics) to finish (supply demand dynamics) and getting from start to finish (resource conversion).

A quality deposit in terms of rare earth content, grade, and accessibility; a first-class concentrate; solvent extraction expertise; chemical know-how to make downstream consistent high-quality products; and long-term consumers for all the separated products, might well define a successful project. But, logic suggests, that there will be little future for any venture that looks like producing more of what is not required than what is in short supply, whatever prices might be.

Beyond traditional minerals technology

Exploring for and mining rare earth minerals are the easy parts. As ore grades diminish, however, beneficiation challenges for effective liberation of desired rare earth minerals increase usually to the detriment of recovery levels.

Grades as high as 5% TREO at the industry leader’s Mountain Pass mine compare with grades that fall well below 1% in some new project instances, making them especially challenging.

Mineral extraction and classical ore beneficiation techniques yield concentrates enriched in LREE, MREE or HREE. Moving on from traditional mineral industry expertise, these concentrates must be further chemically processed to extract mixed REE compounds and then treated to produce separated REE materials for sale.

Given disparate market values for REE, and variable amounts and proportions of individual elements from one deposit to another, it is no easy matter to determine exactly what grade characteristics will maximise profitable returns. There is, however, a premium in favour of HREE, reflecting comparative rarity and likely demand shortfall during the next decade; hence the focus on HREE-rich minerals in exploration.

The economics associated with REE supply mean that leading projects are pursuing a global, vertically integrated agenda from resource determination through mining and beneficiation into chemical processing for mixed REE chloride production and refining to manufacture separated individual rare earth oxides for sale.

Strategic partnerships, producer-consumer alliances, technological agreements and, now, industry consolidation, is shaping what is one of the most complex of natural resources industries to secure sustained supplies. But there is one recently established enterprise that is taking a different approach (see below).





China using quotas to clean up its act

Since emerging through the 1980s, China’s REE industry mushroomed, evolving into a fragmented, scarcely regulated, but still massive industry, of more than 120 extractive operations and more than 70 processing enterprises.

These were across nine of the country’s provinces, from its leading producer at the world’s largest REE deposit in the Bayan Obo iron ore mine in Inner Mongolia (53.3%), through the central provinces of Sichuan (26%) and Yunan (0.2%), to the south eastern provinces of Fujian (2.1%), Guangdong (2.3%), Guangxi (2.7%), Hunan (2.1%), and Jiangxi (9.6%) and the north-eastern province of Shandong (1.6%).

In mainly southern provinces, illegal mining has been rife and accounts for production over-and-above the quota allocations. It is also clear that export quotas have been exceeded through smuggling practices. To combat this, new invoicing systems and audit controls, mooted for some time, are being implemented as regulatory control is becoming more rigorous.

Today, China’s REE industry is regulated by three government agencies through a system of quotas. The best known and most contentious of these are the export quotas controlled by the Chinese Ministry of Commerce (MOFCOM) which led to recent complaints to the World Trade Organisation by the EU, Japan and the US.

The two other quota regimes deal with processing, controlled by the Chinese Ministry of Industry and Information Technology (CMIIT), and mining, controlled by the Chinese Ministry of Land and Resources (CMLR). This May, the mining quotas were decided by the CMLR on a company-by-company basis, rather than as previously on a provincial basis where individual provinces decided company allocations. For the first time, the mining quota allocations are also being made in two tranches, with the second tranche yet to be announced.

It is understood that the change in procedure is a concerted effort to ensure only those companies that meet pollution control standards actually receive allocations, although the stated objective of mining quotas is to stem over-production and to stabilise prices. Given the unexpected shortfall of demand in 2011, surplus finished product remains and, overall, availability appears unhindered. In 2011, the mining quota total was 93,800 tonnes REE, with Inner Mongolia accounting for more than half.

It remains to be seen whether the second tranche, which comes later this year, will maintain the 2011 level.

The MOFCOM first tranche export quota for 2012 is 25,150 tonnes REE. This implies a full-year export quota of 31,438 tonnes, assuming the 80/20 rule remains for the two tranches. Of the first tranche, quantity 88% (22,096 tonnes) are LREE and the balance MREE and HREE.

The quota allocations have been split, with confirmed allocations awarded to companies that have met the new pollution control standards, but only provisional allocations earmarked for those companies that have yet to meet those standards. If companies on the provisional list fail to meet the new pollution control standards by July 2012, then their earmarked quotas will be reallocated to other companies that are in compliance.

As of May 2012, there were 17 Chinese-owned companies with confirmed export quotas totalling 16,066 tonnes REE with 12.3% HREE, and six joint-venture companies, with non-Chinese interests totalling 5,160 REE including 12.8% HREE. Among the provisional export quotas, yet to comply with pollution standards, as of May 2012, are four Chinese-owned companies, two of which belong to the Baogang Group with a provisional allocation of 1,984 tonnes rare earth elements in total, and two j-v companies with non-Chinese interests.

Detailed analysis by Technology Metals Research (December 2011) concluded that China’s policies are not driven by conspiracy to disadvantage foreign investment in Chinese REE companies or a response to rising competition from the US and Australia. Its analysis concludes that China “...continues to march to the beat of its own drum”, and that potential new sources of supply, “...do not drive internal policy”.

Development highlights

Technology Metals Research, in its 15 March 2012 Advanced Rare Earth Project Index, lists 35 REE projects operated by 31 companies across 13 countries. Only a few, however, have mineral reserve estimates that include Molycorp Inc., Lynas Corp., Avalon Rare Metals, Alkane Resources and Rare Element Resources.

North America - Molycorp resuming its former stature

The continent accounts for half of the advanced rare earth projects, with two in Greenland, 12 in Canada and four in the US. Greenland Minerals and Energy Ltd released its initial inferred mineral resource estimate (JORC) in March 2012 for its uranium and REE project at Kvanefjeld, while Hudson Resources Inc. released its preliminary economic assessment for its Sarfartoq project in December 2011.

In Canada, the 12 advancing projects are spread across six provinces/territories: one in Alberta (DNI Metals Inc./Buckton), two in Labrador (Rare Earth Metals Inc./Two Tom and Search Minerals Inc./Foxtrot); two in Ontario (Rare Earth Metals Inc./Clay-Howells and Pele Mountain Resources Inc./Eco Ridge); five in Quebec (Quest Rare Minerals Ltd/Strange Lake, IAMGold Corp./Niobec, Geomega Resources Inc./Montviel, Matamec Explorations Inc./Kipawa, and Commerce Resources Corp./Ashram); and one in Saskatchewan (Great Western Minerals Group Ltd/Hoidas Lake).

Avalon Rare Metals Inc. has rescheduled development of its Nechalacho project near Thor Lake, NWT. Of the 57.49m tonnes indicated resource in the Basal Zone, just over 14.5m tonnes grading 1.53% are now in the probable reserve category. Of the TREO content, 26.1% are HREO. Work is now focused on the feasibility study targeted for completion in the second quarter 2013. Mining is now expected by late 2016. Matamec Explorations Inc. filed its PEA for the Kipawa, Quebec project earlier this year, and is now looking at early 2016 for initiating 5,072 tpa mixed TREO capacity plant. Combined indicated and inferred resources are 81,630 tonnes TREO at 0.3% cut-off grade with 36% HREO.

In the US, Molycorp Inc. is the one company, albeit in several incarnations, with a long pedigree in REE mining and processing dating back six decades to 1952 at Mountain Pass, California. In 1990, Mountain Pass accounted for 40% of global REE production and mining continued for 50 years until 2002. Changes of ownership, new investment, resumption of REE-processing operations in 2007, and commencement of new bastnaesite ore mining began in December 2011.

Molycorp Inc.’s Project Phoenix is scheduled to complete its two-phase modernisation programme at Mountain Pass by the beginning of 2013, when it expects to have 40,000 tpa REE oxide production capacity. In April 2012, the company announced 36% increase in proven and probable reserves to 16.7m tonnes which, on the basis of a 5% REO cut-off and average 7.98% REO grade, yield 1.3m tonnes contained REO. Ongoing work is expected to further increase reserves. The applied cut-off grade is an industry high.

Molycorp, now a NYSE public company, has made several substantial acquisitions that extend its global reach and commitment to downstream integration. The company acquired a 90% share in Estonia’s AS Silmet in April 2011 and doubled REO production capacity to 6,000 tpa. Molycorp also acquired in 2011 Arizona-based speciality metals and alloys manufacturer Santoku America Inc.

In March 2012, Molycorp announced a $1.3bn deal to acquire Toronto headquartered Neo Materials Technologies Inc. which, in addition to operations in 10 countries including China, is involved in projects in Brazil, Korea and Thailand. This is the big end of the business!

In Wyoming, Rare Element Resources announced the results of its Preliminary Feasibility Study in March 2012. Mine recoverable resources at 1.5% cut-off grade are 6.33bn tonnes TREO with an average 3.6% TREO grade. A further 10m tonnes of lower-grade material is also recoverable. The PFS shows 81.2% REE recovery for a mine life of 19 years at a production rate of 10,400 tpa TREO. Earlier work showed the ore to contain 23.6% HREE, representing approximately 62% of the value. Mine permitting is planned for 2014 for mining operations in 2015.

In Alaska, Ucore Rare Metals Inc.’s Bokan Project has an inferred resource of 3.7m tonnes averaging 0.75% REO, of which 39wt% is HREE. A Preliminary Economic Assessment is imminent. In Arizona, AusAmerican Mining Corporation’s scoping study of its La Paz project is also expected imminently.

Australia - Lynas Corp. enters at Mt Weld

Six projects: Kimberley Rare Earths Ltd/Cummins Range, WA; Alkane Resources Ltd/Dubbo Zirconia Project, NSW; Hastings Rare Metals Ltd/Hastings, WA; Arafura Resources/Nolans Bore, NT; and Lynas Corp. at Mt Weld, WA where two projects are being pursued.

Lynas Corp. is ramping up production based on its central lanthanide deposit at Mt Weld. Preliminary process test work is continuing at the Duncan deposit. A revised mineral resource estimate was released in January that showed a combined 23.9m tonnes reserve grading 7.9% REO for a total 1.9m tonnes REO with 99% in the measured and indicated categories. The concentration plant, commissioned in May 2011, continues ramping to capacity achieving more than 71% recovery, while the advanced materials plant in Kuantan, Malaysia was 91% complete in December 2011.

Alkane Resources expects to start mining at its Dubbo Zironia project in 2014, where REE reserves are 8.1m tonnes in the proven category and 27.9m tonnes in the probable category both grading 0.9% TREO. An expected overall production rate of 22,875 tpa includes 4,170 tpa TREE accounting for about 39% of production value. The balance relates to zirconium, hafnium, niobium and tantalum co-products. Construction is expected to start in late 2012 and production in 2014.

Africa - more than Great Western and Lynas

Five countries in Africa account for seven projects: two in South Africa (Great Western Minerals Group/Steenkampskraal and Frontier Rare Earths Ltd/Zandkopsdrift); two in Tanzania (Peak Resources Ltd/Ngualla expecting completion of its scoping study by end 2012 and Montero Mining & Exploration/Wigu Hill); one each in Malawi (Lynas Corp./Kangankunde); Madagascar (Tantalus Rare Earths/Tantalus); and Mozambique (Southern Crown Resources/Xiluvo).

Great Western Minerals Group (GWMG) filed a NI 43-101 report for its flagship project at the former mine at Steenkampskraal in May 2012, which shows combined indicated and inferred resource estimates of 27,972 tonnes TREO on the basis of a 1.00% cut-off grade. GWMG expects to launch production operations in first quarter 2013. Planned capacity is 12,000 tpa REE chloride solutions to produce approximately 5,000 tpa TREO. The company, with its manufacturing facilities in Birkenhead, UK and Troy, Michigan, is aiming to be a fully integrated REE company.

Frontier Rare Earths Ltd filed a preliminary economic assessment for its Zandkopsdrift project in March 2012 and has started on a preliminary feasibility study expected in the third quarter 2012 and its DFS a year later in 2013. Combined indicated and inferred resource estimates to date are 946,000 tonnes TREO at 1.00% cut-off grade. Frontier has established a strategic partnership with Kores and envisages establishing a fully integrated REE project to manufacture separated REE oxides.

Peak Resources published its initial resource estimate in February and expects to complete scoping by December 2012. Similarly, Montero Mining & Exploration published its initial resource estimate in September 2011 as did Tantalus Rare Earths in December 2011. Southern Crown Resources has yet to file.

Lynas Corp. is progressing exploration of its recently acquired Kangankunde Hill project in Malawi. The deposit was initially explored by Japanese and French geologists in the 1980s and 1990s when an inferred resource of 107,000 tonnes TREO was identified in 2.53m tonnes of host mineralisation. With a 3.5% REO cut-off, the average grade was 4.24% REO. Exploration underway is expected to improve these figures. REE resources beyond Lynas Corp.’s remit are also thought to be far larger than initially thought.

Asia outside China

In Kyrgyzstan, Stans Energy is breathing life into the former Soviet Union’s Ketessay II open-pit mine and processing facility. In March 2011, measured and indicated resources (JORC) were 42.98m tonnes TREO with an average 0.264% grade unusually proportioned in favour of HREEs at 46% TREE. Stans Energy acquired ownership of the Kyrgyz Chemical-Metallurgical Plant in February 2011, which will produce separated REO products. As of February, 2012 the PFS is under review.

In Vietnam, in the state-run Lavreco is developing the Dong Pao project in the northern province of Lai Chau and is expected to start producing 3,000 tpa REO by 2013 and later doubling to 6,000 tpa. The project is in cooperation with Japan’s Toyota Tsusho and Sojitz Corporation.

Indian Rare Earths is also partnering with Toyota Tsusho and Shin-Etsu in a j-v constructing a 4,000 tpa REO plant expected on-stream in Orissa by the end of 2012. As its name suggests, IRL is a long-term player in REE based on monazite from its heavy mineral sands operations in Kerala and Tamil Nadu.

Kazakhstan’s state atomic company, Kazatomprom, at its Ulba metallurgical plant in the east of the country is establishing a 15,000 tpa REO plant by 2015 in association with Sumitomo and Sareco.

Elsewhere

Tasman Metals is the EU’s sole REE project at Norra Karr, near Ganna in southern Sweden, where its preliminary economic assessment, published March 2012, showed indicated resources of 41.6m tonnes containing 237,120 tonnes TREO based on an average 0.57% grade. Untypically, content is 51% HREO. Tasman expects to initiate its preliminary feasibility study this year.

In Brazil, Neo Material Technologies, now merging with Molycorp, has a joint-development agreement with Mitsubishi and Mineracao Taboca to establish a 500 tpa REO processing facility in 2012 doubling to 1,000 tpa in 2015. MBAC Fertilizer Corp. has a REE project in Araxa, Minas Gerais.

In Russia’s Kola Peninsula, Lovozersky Mining Co. is understood to operate a 4,000 tpa REO plant at its Kamasurt mine and is looking to expand to 15,000 tpa by 2015. In the Urals, Solikamsk Magnesium Works has a 3,600 tpa REO facility.

In southern Turkey, AMR Mineral Metal Inc.’s heavy mineral sands Canakli-1 project near Burdur is evolving to upgrade its 100 tph hydro-mining and gravity separation operation in 2012. In 2013, it is planned to introduce flotation and hydrometallurgy circuits for REO and co-product titanium, zircon, niobium and scandium products as well as magnetite.

Innovation for a consolidated pathway to market

Formed in Toronto in early 2011, Innovation Metals Corp. (IMC) is grasping an opportunity to establish an independent facility to process REE concentrates from multiple sources to produce separated individual rare earth oxide materials by solvent extraction of the pre-blended concentrates. The opportunity stems from what IMC sees as a bottleneck in the REE supply chain owing to the lack of independent rare earth processing and separation facilities outside China.

Through the creation of a consortium, it envisages provision of low-cost material tolling programmes for producers to provide greater security of supply for consumers. IMC further envisages establishing trading platforms to facilitate participation by the trader community in what is one of the most specialist areas of the industrial minerals world - a pathway to market for the smaller producers.

As the solvent extraction process is lengthy and intensive, far removed from mineral beneficiation techniques, it is a less than practicable proposition on a mine-by-mine basis where comparative ore concentrate characteristics are variable and capital expenditure for processing high. IMC reports early work on mixed concentrates of bastnaesite, monazite, xenotime and adsorption clays yielded mixed rare earth chloride recoveries of more than 90%. Pilot scale standard solvent extraction procedures on the resultant mixed rare earth chloride produced separated REE. The company is now scaling up the process.

IMC has outlined certain requirements that potential producers need to meet for participation in the consortium: mineral resource compliance (JORC or NI 43-101) at the minimum inferred level, good understanding of their project metallurgy and progression towards initial pilot plant stage and REE concentrates should contain at least 50% TREO equivalent and be free from radioactive contaminants.

Summary

Although forecast demand, combined with the external effect of China’s internal policies, have led to an unprecedented exploration and development boom to establish new REE industries outside China, reliance on Chinese REE and REE-containing materials will not disappear.

In the future, it may be expected, given that nation’s longer-term urban development programme and other strategic needs, that China will indeed look after its own requirements ahead of those of others, in principle little different from anywhere else, as it also deals with pressing environmental and social development needs associated with a large and ageing population.

As for the new projects in development, some are emerging today and we may expect several more as the decade progresses. But, the vast majority are not likely to come to production for many years and some not at all, as REE element distribution within ores, among other parameters such as logistics, will fail to make economic sense. Innovation Metals Corp.’s ambitious initiative is seductive in its vision and holds promise for smaller independent projects, but what will be the jury’s verdict - and when?

Contributor:
Gerry Clarke is an independent minerals industry specialist and former Editor of Industrial Minerals and Director of Metal Bulletin Plc.