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.