Rare Earth Mania

Those who have worked in the business as long as I have will easily remember the rare earth mania of 2008-11. For about three years following China’s export restrictions on rare earth elements, which hiked the prices of REEs to record highs, the junior resource market was awash with new rare earth explorers.

These tiny companies fanned out across (mostly) Canada, the US and Australia in search of the next rare earths motherlode that would break the world’s dependence on China, which then and now has a monopoly – the country either mines or processes something like 95% of the 17 rare earth elements (REEs) and turns them into oxides, then continues the process of making high-purity metals, alloys and powders that are used in everything from cell phones, flat-screen TVs, permanent magnets, and lasers, to wind turbines, nuclear reactors and missile guidance systems. Click here for a more comprehensive list

They mostly failed. Not one of those highly touted junior held rare earth deposits outside China has been turned into a mine. The hype dissipated and resource investors moved on to other metals.

Defense Metals

Fortunately there is an easier way to mine rare earths without getting into the inordinately high capital expenditures and processing complexity. The answer? Keep it simple and small, take what mother nature easily gives you.

At Ahead of the Herd we’ve identified a project in northern BC that has all the elements in place for a successful, small-scale rare earth operation: Defense Metals’ (TSX-V:DEFN) Wicheeda Project.

 

 

Located close to a major population centre, Prince George, Wicheeda has no uranium, low thorium values, all the necessary infrastructure, the deposit has simple mineralogy, and the metallurgy has already been demonstrated through bench-scale testing.

Enough historical drilling has been done to compile an historical non-43-101 compliant resource estimate of 11.2 million tonnes grading 1.95% Light Rare Earth Elements at a 1% cutoff (LREE = Ce + La + Nd).A 2009 study was designed to discover the ease of making a rare earth concentrate from a composite rock sample taken from Wicheeda carbonatite, based on three assay samples.

Bench-scale testing yielded more potentially recoverable rare earth elements than the resource estimate’s current REEs (lanthanum, cerium, neodymium and samarium) such as dysprosium, europium and praseodymium.

 

 

The study author, Tony Mariano cited above, noted he’s only seen a high-grade REE concentrate similar to the Wicheeda composite in China, the centre of global rare earths processing.

Bench-scale flotation and hydrometallurgical testwork was done on Wicheeda drill cores at a SGS Lakefield lab during 2010-11. SGS successfully developed a flotation flow sheet that recovered 83% of the rare earth oxide (REO) and produced a concentrate grading 42% REO.

Subsequent hydrometallurgical testing in 2012 on a two-kilogram sample of the concentrate grading 39.7% TREO (total REO) produced an upgraded and purified precipitate that contained 71% TREO through a process of pre-leaching and roasting.

 

For more read our Defense Metals has sights set on rare earths, uranium.

China’s Previous Monopoly

Arguably though, the importance of rare earth elements has never gone away; in fact they are more crucial than ever, as trade tensions between the US and China and the markets for REEs grow – such as for neodymium, praseodymium and dysprosium used in permanent magnets placed in electric vehicles.

This article will look back at the rare earth mania, describe why none of these companies have made it past the feasibility stage, and present a roadmap for how to build a rare earths mine, one step at a time, that is both feasible and cost-effective.

Today, the only significant non-Chinese firms currently producing rare earth elements are Molycorp, whose Mountain Pass mine in California mines the REEs and ships them to China for processing, and Lynas, whose Mt. Weld mine in Western Australia produces a concentrate that is processed in Malaysia. A few other countries produce a handful, tonnage-wise, of REEs but they are very small compared to China – just 1,600 to 3,000 tonnes annually compared to China’s 105,000 tonnes.

For a time though, rare earths were on the lips of every mining investment house and resource junior. To not have a rare earths play meant missing out on the party. The chart below courtesy of Avista Group shows the bubble inflating then the pop. For instance dysprosium prices rocketed from $118 a kilogram in 2008 to an insane $2,262/kg in 2011. Europium ran up from around $600/kg in 2010 to $3,000/kg the following year.

 

 

While the spike in rare earths prices was good for Molycorp and all the exploration companies that sprang up in search of them, buyers of products made from rare earths balked and pressured governments to do something about it. The US, European Union and Japan brought a case to the World Trade Organization to try and settle the dispute and get China to lift the restrictions.

In 2015 it did, resulting in a torrent of Chinese rare earth exports into the market and the inevitable collapse in prices. The move caught Molycorp off-guard. The company had just spent over a billion dollars on another upgrade at Mountain Pass but within months, Molycorp fell deeply in debt and went bankrupt.

 

This Editorial was produced in collaboration with Richard (Rick) Mills & www.aheadoftheheard.com

Click here for the full article

Disclaimer: Defense Metals is a paid client of High Energy Trading, click here to read full disclosure.

High Energy Trading is not a licensed broker-dealer, market maker, investment advisor, or underwriter. All information that we provide is for informational purposes only and should not be construed as an offer or solicitation of an offer to buy or sell securities.

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