Building international partnerships for a resilient rare earths market

02 Oct 2019
By Kitila Davies
Building international partnerships for a resilient rare earths market
In recent years, efforts to diversify the rare earths market has seen a push to develop new value chains through international partnerships. China currently accounts for around 80 percent of world supply, which has led to concerns over supply security and made diplomatic relationships susceptible to coercion and trade disputes. Industries which consume rare earths are seeking to improve the diversity and resilience of the market, by developing new minerals suppliers and processing capabilities.

Rare earth materials are fundamental to modern technology applications, particularly the defence and renewable industries, and have no comparative substitutes. They rarely appear in mineable concentrations, and are usually found dispersed in complex orebodies. This makes the processing and refinement technology the most complex capital-intensive part of the value chain.

As each rare earth stream has a unique geochemistry, each deposit poses separation and extraction challenges that requires the readjustment of the metallurgical process. This involves the use of acid, heat, and pressure to extract the required elements, whilst leaving behind radioactive waste as these orebodies often contain varying amounts of thorium.

The financial and environmental costs associated with processing and refinement remain the largest impediment to developing and diversifying the market. The issues associated with waste disposal have dissuaded many governments from granting long-term licences for processing facilities, while the upfront capital costs required to build these facilities is a deterrent for many companies.

Demand for International Partnerships in Critical Materials

In 2010 international reliance on Chinese rare earth supply was brought sharply into consideration after China suspended exports to Japan for two months following diplomatic tensions. The concern that China’s near-monopoly could threaten downstream consumers saw the US and Japanese governments encourage new investment that would diversify the market.

As the trade war between the US and China continues, the reality that an interruption in exports would have global repercussions has been recognized by technology users around the world. Developing new cross-border value chains is important, as it will provide the breadth required to protect markets against natural and political threats to secure supply.

China not only accounts for the bulk of primary rare earth supply, but also many of the upstream processing capabilities required to make useable products. As a result, it is imperative to take an holistic approach to building new value chains, which seeks diversity at both the raw material and intermediate processing stages.

The Lynas model for rare earths

Investing in partnerships with Australian companies is an attractive and reliable investment opportunity for countries seeking rare earths supply security. Australia has a developed mining sector with the engineering and business capacity to support ambition resource-based projects, very open trade and investment policy regimes, and long-standing and trust-based relationships with many countries involved in the critical material value chains.

The Australian mining company Lynas Corporation has partnered with Japan to pioneer these efforts. In 2011, Sojitz Corporation and state-owned Japan Oil, Gas and Metals National Corp (JOGMEC) signed an agreement with Lynas that sponsored the development of its entry into the market. This ensured a supply of rare earths that represented 30 per cent of the Japanese market at the time. This supported a USD 250 million investment in Lynas’ processing facilities in Malaysia and mine in Western Australia a welcomed development in achieving stability and reliability for downstream rare earth consumers.

The Lynas Mount Weld mining and concentration plant in Western Australia holds the largest and highest-grade deposit of rare earths in the world. Lynas has recently signed an MOU with the City of Kalgoorlie-Boulder for the review of a potential site for a cracking & leaching facility as a part of the Lynas 2025 growth plan. This has come after the Malaysian government stipulated the building of the new plant as a condition of the companies licence renewal for the existing processing plant in Malaysia.

Lynas’ Advanced Materials Plant (LAMP) in Kuantan is a key element of the project. LAMP separates the mixed concentrate produced at Mt Weld into higher-value ‘separated oxide’ products, which can then be used by consumers to make final products (such as high performance magnets). The Malaysian government implemented supportive policies to facilitate the development of the processing plant. However, disposal of the slightly radioactive waste that is a by-product of rare earth refinement has led to on-going environmental licencing issues. In August this year, Lynas’ operating license was extended while a number of additional environmental strategies were put in place.

Broadening value chains through international partnerships

New entrants to the rare earths market will need to emphasise downstream processing in combination with upstream mining and separation. The Lynas model – based on international investment to develop multi-country supply and processing facilities– demonstrates the importance of international partnerships in realising this goal. This international partnership-driven strategy will be important for other companies seeking to replicate its success.

For example, Australia’s Northern Minerals has recently secured an offtake agreement with German company Thyssenkrupp Materials Trading to develop an AUD$329 million mine and processing facility in Western Australia for dysprosium. The demand for alternative suppliers and processors of rare earths has also encouraged Australian companies Hastings Technology Metals, Alkane Resources and Venture Minerals to develop plans to mine a range of light and heavy rare earths.

Bilateral discussions between the US and Australia are seeking to develop a rare earth supply plan that would increase trade between the countries and facilitate the investment needed to develop Australian resources. Lynas and US partner Blue Line Corp are planning a processing facility in Texas that would refine tailings from LAMP specifically for the American market. Ongoing cooperation between Australia and the US will therefore be essential to develop the cross-border value chains to necessary to provide security and sustainability for the rare earths industry.

Authors

Kitila Davies
Kitila Davies
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