Rare Earth Special: Projects in the Pipeline: Rare earths light up global markets

Turbulence continued to dominate the rare earths industry throughout 2012 as the majority of global supply remained under China’s lock and key. Export quota restrictions remained firmly in place during the past 12 months, as the Chinese Ministry of Commerce (MOFCOM) reduced export limits by 27% year-on-year for the first half of 2012 and withheld quotas from more than 20 Chinese companies.

Now, the global rare earths market appears to be stabilising. Rare earths prices have returned to levels that could promote a return to long-term demand growth rates and international players are begining to move into the gap China has left in the market.

Rare earth elements, or REE, are a group of 17 elements - including the non-lanthanides, yttrium and scandium (see table 1). These minerals have historically been produced in abundance in China, yet sizeable deposits have also been explored in Australia, Brazil, Canada, India, Malaysia, South Africa, Thailand, the US and Greenland.

New projects in these areas have been ramping up since the supply situation in China left rare earths buyers no choice but to look elsewhere for supply. Initially, hundreds of players entered the global marketplace to fill the void, yet this number has dwindled to leave just a few leading players.

As with many other minerals, REE are produced for a multitude of different uses.

Traditionally, the demand for rare earths has been driven by the end-markets’ needs and specifications, which in recent years has been centred on the subjects of environmental protection, technology and energy efficiency markets. The most common applications within these markets include permanent magnets, lasers, mobile phones, tablet devices, weapon defence applications and green technology such as electric vehicles (EVs), solar storage batteries and wind turbines.

Rare earths use in automotive pollution control catalysts, permanent magnets and rechargeable batteries is expected to continue to rise as future global demand for conventional and hybrid vehicles, computers, electronics and portable equipment increases.

Increased rare earths use is also expected in fibre optics, medical applications that include dental and surgical lasers, magnetic resonance imaging, medical contrast agents, medical isotopes and positron emission tomography scintillation detectors, according to the US Geological Survey (USGS).

The outlook for the rare earths market in the long term will remain competitive as the research and technology sectors continue to advance their knowledge of rare earths and their interactions with other elements. New applications are expected to continue to be discovered and developed, especially in areas that are considered essential, such as new energy and defence.

Rare earths mine production in the US and Australia was non-existent in 2010 and 2011 due to expensive start-up costs and continued reliance on supply from China, yet the reserves in these countries, recorded by the USGS, are fairly sizeable at 13m tonnes and 1,6m tonnes respectively (see table 3). After the supply situation in China reached tipping point, rare earths explorations at these reserves began and now, in 2012, several companies have successfully commenced operations in these areas.

US-based Rare Element Resources Ltd this May increased the resource estimate for its Bear Lodge project in Wyoming to 6.8m tonnes grading 3.79% rare earths oxide (REO) and measured and indicted categories, up from 6.2m tonnes averaging 3.75% REO.

The Bear Lodge property contains the light rare earths (LREE) lanthanum, cerium, praseodymium, neodymium, samarium, europium and gadolinium. Four of these, cerium, lanthanum, neodymium and praseodymium, listed in decreasing abundance, make up the majority of the Bear Lodge distribution, and neodymium and praseodymium are considered especially valuable.

In-depth metallurgical and process data is being developed to be incorporated into the Bear Lodge Rare Earth project’s definitive feasibility study, which is scheduled to commence in the first quarter of 2013.

“We are pleased with the progress of our technical work necessary to advance our process and introduce efficiencies that will be incorporated in the feasibility study. To that end, we are working on numerous studies to optimise our development plan. Our goal is to implement the most efficient, effective and environmentally sound process to concentrate the rare earth elements found at Bear Lodge and the surrounding target areas,” Jaye Pickarts, Rare Element Resources COO, told IM.

Further to its success at the Bear Lodge property, Rare Element Resources also identified significant heavy rare earth element (HREE) enrichment at its Whitetail Ridge Resource Area and at the Taylor and Carbon target areas in August 2011. The updated resources for the Bull Hill and Whitetail Ridge areas were reported by the company in May 2012 and were based on results from the 2009-2011 drill programs.

Included in the results is the thickest continuous intercept of rare earths mineralisation found to date at Bull Hill, consisting of 95 meters averaging 4.18% total rare earth oxide (TREO). Re-assay for rare earths of selected intercepts from historic gold exploration drill holes at the Carbon target also identified significant zones of high-grade rare earths mineralisation, including the highest grades yet reported from the Carbon target.

Additional assay results are expected for drill holes from Bull Hill, Whitetail Ridge, and Carbon during the next few months.

Rare Element Resources’ activities in 2012 also included the plan of operation for mine permitting, marketing of concentrate from the pilot plant, testing for rare earths oxide separation, additional drilling for rare earths-resource expansion and upgrading, metallurgical optimisation studies and completion of mine permitting for 2014.

South west of Rare Element Resources’s, activities one of the world’s light rare earths leaders, Molycorp Inc., is ramping up operations on the south flank of the Clark Mountain Range, just north of Mountain Pass, California.

The Mountain Pass deposit contains 8% to 12% rare earths oxide, mostly contained in the mineral bastnasite. Gangue minerals include calcite, barite and dolomite. Known remaining reserves are estimated to exceed 20m tonnes of ore as of 2008, using a 5% cut-off grade, and averaging 8.24% rare earths oxide.

Lanthanum, cerium, neodymium and praseodymium products make up the majority of Molycorp’s commercial output from Mountain Pass. However, the company also produces commercially-significant quantities of heavy rare earths including europium, terbium, dysprosium and yttrium.

Molycorp began construction of phase one of Project Phoenix in January 2011, and this is expected to be completed with phase 2 by the end of 2013. During that same year, the company’s three facilities, Molycorp Mountain Pass, Molycorp Silmet and Molycorp Metals & Alloys, produced more than 3,500 tonnes of rare earths products, as measured in REO equivalent.

The expansions of facilities at Mountain Pass are estimated to increase production to an annual phase one rate of 19,050 metric tonnes by the end of 2012.

“We will have the capacity to produce at an annual rate of up to 40,000 tonnes after our Phase 2 expansion of Mountain Pass is completed by the end of 2013,” the company said.

Projects have been progressing at an equally fast pace in Australia. Of particular note are the Alkane Resources Ltd Dubbo Zirconia project in New South Wales, Arafura Resources Ltd’s Nolans Bore mining and beneficiation project in the Northern Territory and its Whayalla processing operation in South Australia as well as Lynas Corp.’s Mount Weld project in Western Australia (see table 2).

The Dubbo Zirconia Project (DZP), which is located 30 km south of the large regional centre of Dubbo, approximately 400 km north-west of Sydney in the Central West Region of New South Wales, is held by Australian Zirconia Ltd (AZL), a wholly owned subsidiary of Alkane Resources Ltd. The DZP resource contains mainly LREE but also HREE including yttrium.

A definitive feasibility study was completed in September 2011 based upon a 400,000 tpa ore throughput, yet due to changing market dynamics, this feasibility study has been expanded to assess a 1 mtpa project.

The project has been demonstrated to be technically and financially robust based on simple open-cut mining and processing on site, with all infrastructure and waste management located within the project site.

Due to the size of the resource, mine life is expected to be more than 70 years and the project will be a strategic and alternate supplier in the zirconium (hafnium), niobium (tantalum), yttrium and rare earths industries. Its zirconium output will not be dependent on zircon supply and the yttrium and heavy rare earths independent of China’s production (see below).

Process development, including improved metal recovery, water recycling and value engineering is continuing and a number of memorandums of understanding for product off-take have been signed, including a toll-treatment purchase agreement with Japan’s Shin-Etsu Chemical, which will enable both rare earths concentrates to be processed to separated high-purity individual rare earths oxide.

An environmental impact study (EIS) will also be lodged with the NSW authorities by the end of 2012. The current schedule anticipates all approvals and financing in place in the second half of 2013 and production commencing late 2015.

In the Northern Territory of Australia, Arafura Resources Ltd continued to develop its Nolans Bore project as well as advancing the Whayalla processing operation in South Australia (see interview on page 48).

Rare Element Resources’s Beaver Creek Alluvial Monitoring Well, designed to monitor groundwater quality and water level in the shallow alluvial aquifer to assess potential future mining impacts

Meanwhile, Australian light rare earths producer, Lynas Corp., together with its closest competitor outside China, Molycorp, is expected to add around 41,000 tonnes rare earths oxide capacity in the next few years, effectively leading the light rare earths market outside China.

Lynas’ Mount Weld project, located 35 km south of Laverton, Western Australia, is now up-and-running, and the company will soon undertake a detailed feasibility study for the development of its Duncan Deposit, also part of the Mount Weld precinct.

The Duncan deposit contains higher amounts of heavy rare earths than the central lanthanide deposit that is being mined for processing in Malaysia. This follows a scoping study, which considered various forms of processing, before deciding that direct chemical beneficiation was most suitable. The estimated capital cost for a processing plant for the Duncan deposit is $600m.

Lynas’ presence in Australia is significant, but it has been the company’s operations further north that have been capturing recent headlines as the company continues to face environmental criticism over the Lynas Advanced Materials Plant (LAMP) in Kuantan, Malaysia.

Nolans Bore Site: diamond drill rigs set to work at the site, where Arafura has completed its bankable feasibility study and conducted environment and technology demonstration studies for the mine and processing operations

Lynas received its temporary operating licence (TOL) to begin work at the LAMP in September this year. The Malaysian Atomic Energy Licensing Board (AELB) issued the two-year licence to run until 2 September 2014, subject to several conditions.

Lynas planned to start transporting rare earths concentrate to Malaysia from its Mt Weld mine in Australia, and saw the potential to begin processing at the $800m LAMP in October. The news saw the company’s share price to climb more than 40% the following day.

However, civic groups including the Save Malaysia, Stop Lynas! and Himpunan Hijau protest organisations, which have staged numerous protests against the LAMP facility since construction began two years ago, continued to object to Lynas’s operations as the TOL went through.

Applying to Malaysian courts, the protest groups successfully delayed the LAMP project until their appeal is heard.

Lynas has emphasised on a number of occasions that the co-products produced from the beneficiation process will be well within the limits of what is considered safe. The company also added it would address the ‘’principal cause of the community anxiety’’ with regard to the disposal of processing residue from the LAMP by turning the material into exportable ‘’processed co-products’’ for the construction industry.

The LAMP project is the first rare earths refinery to be built outside China in almost three decades, and represents a significant step towards achieving supply diversity in the rare earths market.

Canada

Almost 13,000 km away in the Northwest Territories of Canada, Avalon Rare Metals is leading the way in heavy rare earths exploration. The company’s Nechalacho project is expected to reach bankable feasibility stage in the second quarter of 2013, with financing completed by the end of that year ready for construction in the early quarters of 2014.

As of May 2012, 85,240 metres of drilling at a cost of more than Canadian dollar (C$) 57m ($57.8) has been completed in exploring and developing the Nechalacho property. With the resource estimation update released in July 2012, estimated Measured Mineral Resources in the Basal Zone are 8.90m tonnes, grading 1.64% TREO (lanthanum to lutetium plus yttrium) and 21.7% HREO/TREO, using the base case C$260 ($263)/tonne net metallurgical return (NMR) cut-off.

At the C$400 ($405)/tonne NMR cut-off, there are an estimated 8.42m tonnes of measured mineral resources grading 1.69% TREO and 21.82% HREO/TREO. Indicated mineral resources in the Basal Zone are an estimated 63.76m tonnes grading 1.52% TREO and 21.41% HREO/TREO at the C$260 ($263)/tonne NMR base case cut-off.

The company has completed its pilot flowsheet and is currently working towards other milestones including Aboriginal agreements, environmental permitting and off-take agreements for the project.

It is also in the course of developing a separation plant in Louisiana, US, which will process the heavy rare earths mined at its project at Thor Lake in the Northwest Territories of Canada, Pierre Neatby, Avalon Rare Metals VP of sales and marketing, told IM.

In a bid to learn from Lynas’s experience in Malaysia, Neatby stressed the importance of working with local communities in both Louisiana and Thor Lake in order to reduce the amount of local concern.

“This is a big factor of what we do at Avalon. Communication with the locals is of high importance,” he said.

Avalon is in discussions with end customers in Asia, Europe and North America and plans to work with companies in the LED lighting and consumer electronics industries, as well as those developing magnet materials for motors, wind turbines and EVs.

In Quebec, Canada, Matamec Explorations Inc. continued drilling its Kipawa deposit this year. Its HREE Kipawa deposit contains dysprosium, terbium and yttrium, which are, like Avalon, being mined with EVs in mind.

Matamec signed a joint-venture agreement with Toyotsu Rare Earth Canada (TRECan), a subsidiary of Toyota Motor Corp., in July this year in order to move ahead with a NI 43-101 preliminary resource estimate and, later, a feasibility study.

This is the first time any RE company has agreed to receive funds from an end user to accelerate and complete a feasibility study.

TRECan provided C$8.5m ($8.6m) 25% and C$7.5m ($7.6m) 24% for the NI 43-101 and has also signed an off-take agreement to buy 100% of the rare earths concentrate. Matamec will remain the operator of the Kipawa deposit.

The company begun the feasibility study in May this year and plans to publish the results in the second quarter 2013, with projected production in 2015-16. Toyota Motor Corp. will use the rare earths to manufacture its range of hybrid and electric vehicles.

Tanzania

In East Africa, Montero Mining & Exploration has been working to secure a strategic or off-take partner to move to the next stage of development at its Twiga Zone, Wigu Hill project in Tanzania. The company is now ready to take the project to pre-feasibility and feasibility study stage.

“Montero’s focus is the development of our Wigu Hill RE deposit in Tanzania. We have recently announced an increase in our ownership to 80% of the projects. We have also been working very hard on the minerals processing, metallurgy and hydrometallurgy as we believe this will a driver to creating value and secure a strategic and off-take partners to secure future sales of rare earths,” Dr Tony Harwood, CEO, told IM.

The Wigu Hill rare earths project is a light rare earths deposit and a large carbonite complex with bastnaesite mineralisation. Initial grab samples yielded results as high as 27.25% TREO. Montero released an initial NI 43-101 Inferred resource estimate of 3.3Mt at 2.6% LREO5 including 510K at 4.4% LREO5 on two of 10 possible drill targets. Further exploration drilling to add to the current resource is underway.

Montero also plans to move from mine to metal by having a mining operation at the Wigu Hill area producing a minerals concentrate that will be treated further in a RE refinery to produce fine RE chemicals metals and alloys for sale.

Montero has been targeting heavy rare earths deposits to complement its light rare earths deposit at Wigu Hill to enable rare earths refinery plans to progress with the ability to process all the rare earths that are required by the end market.

In South Africa, Great Western Minerals Group Ltd. (GWMG) is moving ahead with a project to re-commission the abandoned Steenkampskraal mine in the Western Cape owned by Steenkampskraal Monazite Mine Ltd.

In June 2011, GWMG appointed SRK Engineers and Scientists of Johannesburg to complete a feasibility study on the project and, in August, agreed to purchase all of the materials produced by the mine for a 10-year period.

The mine, which has shown up both heavy rare earths and light rare earths from a monazite, was put on hold until recently due to the stranglehold China had on the rare earths industry.

Europe

GWMG also planned to increase rare earths metals processing capacity at its UK-based subsidiary, Less Common Metals Ltd (LCM) in 2012. A new furnace at its Hooton Park operation, Birkenhead, UK is expected to increase LCM’s processing of specialty metal alloys that include RE materials by approximately 50%. The new furnace was designed to provide NdFeB alloys for sintered magnets. The company has been focusing primarily on the battery alloy and hydrogen storage markets.

LCM has long-term commitments to major customers such as Aichi Steel, a partially owned subsidiary of the Toyota Group of Companies, and Vacuumschmelze of Germany to supply rare earths alloys. Both supply agreements are based on the future supply of rare earths from the Steenkampskraal mine.

Also in Europe, Tasman Metals’ Norra Kerr project is also moving steadily ahead in Sweden. The company president and CEO, Mark Saxon, told IM that he expects to go into production in four to five years’ time.

“Although things have been tough, there has been no change from the demand side, so no change in the real market, the fundamental market,” Saxon said.

Tasman has lodged its mining lease application and is therefore past the first steps to getting the approvals we need to be able to open a mine.

“That’s a key step for us. We have done a lot of drilling and sampling work over the summer and that’s given us an expanded technical database to be more confident in our resources in the ground,” Saxon added.

Seventy new holes were completed this year and two existing drill holes were extended, for a total of 12,453m of drilling.

This drilling formed part of an extensive summer programme of geological, geotechnical and environmental work directed at collecting data appropriate for future land use decisions, mine planning and permit applications.

Mineralisation is now known to extend at least 100m below the in-pit resource considered for the Norra Kerr PEA published in March 2012. With this substantial increase in drilling data, the upcoming Pre Feasibility Study (PFS) will include an updated NI 43-101 resource calculation.

“Now all of our work is focused on our extraction techniques on the metallurgy and how we’re going to get the metals out of the rock and that’s really where all of the money’s going now is in that process,” Saxon said.

Tasman’s wholly-owned Norra Karr project is the only NI 43-101 compliant rare earths resource in mainland Europe.

Looking ahead

Mining industry expert Dudley Kingsnorth forecasts global rare earths demand to be between 200,000 and 240,000 tonnes by 2020, of which demand outside could be between 70,000 and 90,000 tpa. By this time, Kingsnorth expects light rare earths he said during a presentation at the Toronto Technology Metals Summit at the beginning of 2012.

In terms of demand, this is not likely to subside. Like many of earth’s minerals, rare earths are of paramount importance to everyday life - becoming increasing more so with the advent of new and green technologies.

“The use of rare earths in magnets that allow electric motors and electrical generators such as wind and hydro turbines to become more efficient in energy generation [is driving demand outside China],” Montero’s Harwood told IM.

“The companies that use the rare earths for these purposes have been provided irregular supplies of rare earths from China and hence many are looking for sources of primary rare from outside China,” he added.

Substitutes are out there, yet they are expensive to develop and more often than not, substandard when compared with the real thing.

This, again, is not thought to affect the overall growth of the rare earths market outside China.

“While geopolitical dimension may capture headlines, it is the ubiquity of rare earths that ensures demand longevity - even as countries and companies channel millions of dollars into research efforts to find substitutes for rare earths, even greater amounts of R&D dollars are being invested into new products and processes involving rare earths,” Lynas Corp. told IM.

Yet, while demand remains strong, there are factors slowing down this growth outside China, Lynas explained. 

“The constrained availability of certain rare earths, especially heavy rare earths, manufacturing productivity improvements such as on-site recycling and the price disconnect inside and outside China, are all factors impacting the competitiveness of non-China users,” the company told IM.

The state of the global economy will also have an impact on the global rare earths market, as it does on many industries, yet the acceleration and increasing application of the rare earths in new and existing technologies will certainly keep the industry’s head safely above water for many years to come.

“The market demand is going to grow significantly and this has to be matched by supply outside of China, which is using its own RE for internal demand,” Harwood concluded.

The author would like to thank Alkane Resources Ltd, Arafura Resources Ltd, Avalon Rare Metals, Matamec Exploration Inc., Montero Mining & Exploration, Lynas Corp., Rare Element Resources Ltd and Tasman Metals Ltd for their help in putting this article together.