Molycorp rare earths facility. Mountain Pass, California. (Image from Molycorp's Facebook).
Will China’s 95% control of the global rare earths market remain unchallenged?
After Molycorp – the only mine and processor of REEs in the United States- filed for bankruptcy in 2014, everyone seemed to think so. This viewpoint remained unchanged despite the fact that in August of 2016, Lexon Insurance Co. offered to lend the estate $4.2 million to continue operations of its Mountain Pass mine under care and maintenance.
Perceptions of China’s dominance weren’t shaken when shares for Australia’s Lynas Corporation surged 20% in early July after the company announced record production and sales volumes, particularly in the neodymium-praseodymium segment. This improved performance also helped Lynas reduce interest rates in its $203 million Japan Australia Rare Earths senior loan facility.
But, could unexpected decisions and ongoing projects developing in different countries start paving the way towards a more diversified and less opaque REEs market?
After a wavy trajectory that started with extremely high prices between 2008 and 2011 and a dramatic 70% fall afterwards, the first semester of 2016 saw a slight recovery.
Two major factors are driving the climb:
Second, a number of countries are starting to get down to work and developing rare earths projects aimed at capitalizing the widespread use of these minerals throughout a variety of industries.
In Australia, Arafura Resources’ 100%-owned Nolans Project is working towards becoming a long-term supplier for the next 30 years by exploiting its rare earths-phosphate-uranium deposit, which is rich fluorapatite, allanite, and monazite and contains 56 million tonnes of mineral resources at an average grade of 2.6% rare earth oxides.
The company’s plan is to produce and process a concentrate resulting in a rare-earth intermediate products, which will be separated overseas into their individual components.
Also in Australia, Northern Minerals just received government approval for its Browns Range pilot plant, which should start producing a concentrate of coveted heavy rare earths by mid-2017. Although NM is a local company, for this project it received assistance from China’s Huatai Mining, whose leadership agreed to inject $30 million in equity.
On the other hand, Australian Peak Resources is developing the Ngualla Rare Earth Project in Tanzania, whose construction is expected to start in 2017. Production should begin by late 2018/early 2019.
The mine has a high proportion of neodymium and praseodymium, and the plan is to produce approximately 2,300 tonnes per annum of mixed neodymium and praseodymium rare earth oxide, 250 tonnes per annum of mid and heavy rare earth carbonate and 5,900 tonnes per annum of lanthanum and cerium carbonate.
In Malawi, Mkango Resources -the only rare earths-focused company listed on the London Stock Exchange- is working on the Songwe Hill Rare Earths Project, loaded with light neodymium and praseodymium, and heavy dysprosium and terbium. Its feasibility study should be completed in some 18 months, and construction should be finished by 2020. The company also identified two more potential rare earths targets at its Phalombe licence in the South African country.
In Canada, Commerce Resources received, in August of 2016, $2 million in fresh financing and started a new round of definition drilling on its Ashram rare earths deposit in Quebec, rich inneodymium, praseodymium, europium, terbium, dysprosium, and yttrium.
Two years ago, the Canadian government and industry leaders also announced that the country wanted to secure 20% of global supply by 2018, relying on projects by Rare Element Resources, Avalon Advanced Materials, Quest Rare Minerals and Great Western Minerals.
But regardless of the number of developments across the world, analysts from Commodity Inside and Market Research deem the rare earths market to be unstable and distorted. If China were to increase export quotas from current levels -they say- prices would plummet dramatically and this could potentially put many companies out of business even before they become fully operational.