Trade wars, 'green' outlook rejuvenate rare earths

By William Clarke
Published: Monday, 12 October 2020

With government support for rare earths mining increasing, a growing number of miners – including mineral sands producers – now see value in a market that, for a long time, was effectively closed to non-Chinese producers due to its high costs and strict environmental regulations.

For decades, China has been by far the largest miner of rare earths – a group of 17 elements with unique magnetic and physical properties and a wide range of high-tech applications. And, more significantly perhaps, China also processes almost all the rare earth ores mined globally. Processing and refining rare earths is a complex, expensive and potentially very polluting business because of the need for repeated acid reductions to separate out the elements – hence the tough environmental controls.

This concentration of the industry in China is worrying for governments outside the country, given that rare earths are essential in a large number of cutting-edge military and 'green’ technologies.

In addition, rare earth magnets have become key elements in a number of new energy technologies. Made from the rare earths neodymium and praseodymium – often alloyed with dysprosium or terbium – these magnets are used in the power trains of electric vehicles and in the power-generation technology used with wind turbines. The supply of these magnets is, therefore, critical to the carbon-reduction plans of most developed economies.

Concerns over Chinese dominance of rare earth supply chains have been voiced for decades, but the issue has taken on new political urgency due to recent events. The trade tensions between the United States and China – sparked by tariff policies of the current US administration – have raised fears that rare earth exports from China could be restricted. 

Supplies outside China
The impact of the Covid-19 pandemic has also triggered concerns over the vulnerability of the global supply chain, leading to a growing interest in support for non-Chinese rare earth supplies and unlocking a slew of government support programs. 

In the United States, a series of presidential orders in 2019 called for an increase in domestic rare earth mining, refining and magnet production capacity; the US Department of Defense has stepped up its strategic stockpiling of key rare earths; and two current bills in the US legislature aim to provide tax breaks and support for rare earth miners and processors.

Australia and India, meanwhile, announced in June 2020 that they had agreed to co-operate on the supply of key minerals including lithium, zircon and rare earths to India’s new energy sector. And in September, the European Union unveiled a new strategy to fund critical mineral projects – including rare earth mining and processing – through the European Investment Bank. 

The small number of rare earth producers operating outside China has already begun to reap the benefits of these programs. In particular, Lynas Corp, which mines rare earths in Australia and processes them in Malaysia, has benefited after a reversal in strategy by the Malaysian administration saw an easing of restrictions on the processing of rare earths in the country.

In July, Lynas announced that it had secured funding from the US Department of Defense to build a heavy rare earth processing plant, despite opposition from some members of the US Congress who argued the contract should go to a US-owned company.
Also in July, MP Materials, which operates the only rare earths mine in the US, announced that it would list on the New York Stock Exchange – with an estimated value of around $1.5 billion – to raise money to develop US-based processing capacity.

Mineral sands too
Another beneficiary of this support could be the mineral sands industry. Heavy mineral sands deposits are formed by hydrological action, which sorts sands of a similar weight. This means they consist of seams of sand containing a mixture of products. The most commercially important components of these mineral sands deposits tend to be ilmenite and rutile, which are ores of titanium, zircon, and, in some reserves, garnet. 

But the deposits also often contain a significant amount of monazite ore, which is made up of valuable rare earths, such as cerium, lanthanum and neodymium, alongside the radioactive metal thorium, which can be used as nuclear fuel, in certain technical alloys and as an industrial catalyst.

The International Atomic Energy Agency (IAEA) classes thorium-232, thorium-228 and thorium-230 as "low-toxicity alpha emitters" when contained in ores, or in physical and chemical concentrates. While there are currently no commercial thorium reactors in operation, there is considerable interest in its potential as a nuclear fuel because reactors using it produce less waste and are much harder to integrate into a nuclear weapons program.

Despite the potential value of monazite, it is usually discarded because its radioactive thorium content can make it too costly to mine and process to extract the different elements it contains. With a changing political environment, and the promise of sustained demand from the mineral sands sector, however, some miners are showing an increased interest in the previously unmonetized monazite fraction of their reserves.

Irish mineral sands miner Kenmare Resources has already begun exporting a monazite-rich mineral product from its Moma mine in Kenya. Kenmare made its first shipment of 13,300 tonnes of mineral sands concentrate in the second quarter of 2019.

In April, Iluka resources began production of rare earths at its Eneabba Project in Western Australia. Iluka plans to sell 50,000 tonnes per year of a 20% monazite-zircon ore concentrate for further processing. The company already has a two-year offtake for this project and is now working on a Phase 2 development at the Eneabba Project with a target of refining the monazite to an 80% concentrate before sale.

The material produced at Iluka is currently suitable for sale to Chinese processors, but Fastmarkets understands that the company is also potentially interested in moving even further down the value chain, and is consulting on the possibility of constructing rare earth processing capacity in Australia.