Russia’s plans for world rare earths domination

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Published: Wednesday, 29 October 2014

Russia aims to become rare earths self-sufficient; Tomtorskoe and Yakutia fields to be developed.

By Eugene Gerder

The Russian government has publicised its intention to become the world’s largest producer and exporter of rare earths over the next few years and is investing up to Russian rouble (R) 145bn ($4.5bn*) in the industry by 2020.

During the Soviet era, production of rare earths in Russia reached 8,500 tpa. Production took place in more than 30 regions of the USSR.

However, since the collapse of the USSR in 1990 and the number of political and economic crises in the country, the production of rare earths in Russia has almost stopped, while Russia became a net importer of them. Since the beginning of the millennium, the situation in the industry has started to improve, which has resulted in the resumption of production of rare earths in Russia.

According to Denis Manturov, Russia’s Minister of Industry and Trade, the planned investments will allow the country to fully provide its local needs in rare earths and will mean there will no longer be any need for imports.

He also added that Russia has perfect conditions for the development of rare earths production, taking into account that Russia currently remains the world’s second largest country in terms of rare earths reserves, which are estimated at 19m tonnes (17% of the global market). Overall it has at least 14 discovered rare earths fields, the majority of which are located in the northern regions of the country, and in particular the Kola Peninsula, Krasnoyarsk region and Murmansk.

According to analysts at the Russian Ministry of Industry and Trade, implementation of the announced projects in the field of rare earths is an acute need for Russia.

According to the Ministry, Russia currently accounts for about 2% of the world’s production of rare earths and without the implementation of new projects the country’s share in the rare earths world output of rare earths will fall below 1.5% in the coming years.

Analysts at the Ministry also predict that by 2020 the demand for rare earth metals in Russia will reach 5,000-7,000 tpa in a bearish scenario. An optimistic scenario gives a demand scenario of 13,000 tonnes.

Tomtorskoe developments

At the initial stage particular attention will be paid for to the development of the Tomtorskoe rare earths field. The field is located in Yakutia and holds reserves of 154m tonnes ore at a grade of 6.71% niobium oxide, 0.6% yttrium, 0.048% scandium and 9.53% terbium**.

The first stage of the project will involve the production of ore, while the second the production of individual oxides. The third stage will involve the production of a final product.

The project will also involve the establishment of a hydrometallurgical plant, the location of which will be announced later, as well as deep processing of radioactive monazite sand, containing about 40,000 tonnes rare earths in the city of Krasnoufimsk (Ekaterinburg region).

According to state plans, the project will be carried out by the already established joint venture (JV) between state-owned enterprise Rostec, and IST Group, one of Russia’s largest investment and holding companies.

According to Manturov, the newly established JV should receive a licence for the field’s development by the end of the current year and expects to begin production in the middle of 2015.

In addition to Yakutia, similar projects will be implemented in Murmansk, a port city, located in northwest Russia, which is expected to become a centre for Russia’s rare earths production in the coming years.

Murmansk Governor Marina Kovtun said the region has perfect conditions for it, taking into account that it accounts for 75% of total Russian reserves of rare earths.

According to state plans, the majority of rare earths future production from the Murmansk region will be derived from the Khibiny-Lovozero.

Details of other projects are currently not disclosed.

It is planned that implementation of the majority of projects in the Russian rare earths industry will take place on the basis of public-private partnership.

According to Andrew Korobov, CEO of PT Global Resources, a Rostec subsidiary which will focus on the direct implementation of the rare earths projects, by 2016 the government, together with private investors, plans to create up to 3,700 new jobs in the industry and to introduce up to 32 patents in the field of rare earths.

R&D into rare earths

The government has also set out that it plans to participate in the project through the funding of R&D activities in rare earths, as well as designing a single regulatory framework for the industry by training personnel, as well as the provision of subsidies for the disposal of radioactive waste.

In the case of R&D projects, the government has already allocated a $5m research fund for Urals Federal University to be used specifically for investigating rare earths and scandium extraction from uranium ore.

At the same time, it plans to resume geologic exploration in rare earths (which stopped in 1990), as well as training experts in this area. The latter is also expected to be achieved through the establishment of a number of high schools throughout the country and the opening of special departments in Russia’s leading universities, which will focus on the training of specialists in the field of rare earths.

During Soviet times, the USSR had about five high schools, which specialised in the training of such experts, however, after the collapse of the country, the majority of them were closed.

According to state plans, the successful implementation of the project will lead to total sales of finished domestic production of R50bn ($1.2bn) by 2020. Main end markets are expected to be seen in wind energy, as well as automotive, aerospace and electronics industries.

It is planned that, in addition to Rostec and IST Group, implementation of rare earths projects in Russia will involve the participation of the country’s leading fertiliser producers such as Akron, Uralchem and Phosagro, as rare earths can be a by-product in the production of fertilisers. Moreover, there is also a possibility of participation of Russian nuclear giant Rosatom.

*Conversion made October 2014

**These figures have not been verified by IM but are widely quoted. The Tb figure, in particular, looks very high - IM editorial