As it has often been stated, the name “rare earths” is a misnomer. They are not really rare at all.
There are thousands of mining projects around the world that will have rare earths in their assays. As they say, rare earths are like belly buttons – everyone’s got them.
The dramatic difference amongst all those projects, however, is how much rare earths the project has – and most critically – what rare earth elements (REEs) it contains.
According to Geoscience Australia (GA), the group of metals referred to as REEs comprises the 15 elements of the lanthanide series.
“Although these elements are referred to as rare, they are not particularly rare in the earth’s crust. Cerium is the 25th most abundant crustal element and lutetium, the scarcest REE, is about the 60th most abundant. However, it is not common for them to occur in concentrations sufficient to support commercial mining operations,” GA states.
Rare earth magnets
Rare earth magnets are strong permanent magnets made from alloys of rare-earth elements. Developed in the 1970s and 1980s, rare earth magnets are the strongest type of permanent magnets made, producing significantly stronger magnetic fields than other types, such as ferrite or alnico magnets.
The magnet market segment is the largest rare-earth market by volume and will continue to outperform other market segments and is forecast to account for 40-50% of the REO market by the end of the decade.
The US government has identified rare earth magnets as critical for the nation’s future, from both a domestic use and defence standpoint.
Over the past few years, the US Department of Energy has outlined numerous programmes and is investing billions to help the Biden government dramatically improve the USA’s standings as a rare earths magnet producer in a market that is currently dominated by China.
Demand
According to leading commodity research firm Wood Mackenzie, there will be a 70% increase in total demand for magnets by 2030.
It suggests that the world needs at least 10 new REE mines by 2030 to meet magnet rare earths demand.
The global rare earth metal market size was valued at US$11.3B in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 3.3% over the next seven years.
A recent report by IndexBox forecasts that the global rare earth metals market will reach US$14.7B by 2030.
Racing to meet demand
Two companies that are at the forefront of developing new rare earth projects that will assist with meeting magnet demand are Arafura Resources (ASX: ARU) and Ionic Rare Earths (ASX: IXR).
The two Australian companies operate in two remote, but vastly different locations.
Arafura’s main focus is the Nolans Project in Australia’s Northern Territory.
NdPr oxide is Arafura’s flagship product for use by advanced magnet manufacturers. The Neodymium Iron Boron (NdFeB) permanent magnet market is the largest market for NdPr oxide and Arafura’s product mix is ideally suited to meeting demand from leading magnet producers in Japan, Korea, and China, as well as automotive and wind turbine end users in Europe, Japan, Korea, and the USA that are securing product for their value chain.
Rare earths used in NdFeB magnets represent the single largest segment by application, accounting for 45%.
According to Arafura, the use of NdFeB magnets in the automotive, wind turbines and factory automation sectors are the biggest growth applications for NdPr oxide demand.
The growth in NdFeB magnets since 2005 is attributed to increased use in the automotive industry, in particular electric drivetrains and electric power steering used in battery, plug-in hybrid and hybrid EVs.
Passenger EVs have grown from 450,000 in 2015 to almost 10M units in 2022, with forecast worldwide expansion of EVs predicted to grow to 34M in 2030.
Global consumption of sintered NdFeB magnets in 2022 was 184,000t. NdFeB magnet consumption is forecast to grow by 5.8% a year in the foreseeable future with demand reaching 322,000t in 2032. Use of NdFeB magnets in EVs is forecast to account for 32% of total demand by 2032.
According to Arafura, Nolans is the only advanced fully permitted Ore to Oxide project of scale outside China.
The company has already signed a cornerstone binding offtake agreement with Hyundai and Kia and a non-binding MoU with GE Renewable Energy to collaborate in establishment of sustainable supply chain for NdPr.
With the project debt process well under way, Arafura says Nolans is on track for commencing procurement and construction in early 2023.
Ionic Rare Earths
Ionic’s rare earths source is the giant Makuutu project located in Uganda. However, the company’s road to the magnet market also includes plans for rare earths refining and recycling operations in Europe and the USA.
According to Ionic, Makuutu is one of very few global ionic adsorption clay (IAC) deposits with scale to move the needle on heavy rare earth oxide (REO) supply, with as MRE of 532Mt @ 640 ppm and significant exploration upside.
The project benefits from simple mining and low capex processing to produce Mixed Rare Earth Carbonate (MREC).
The project developers are currently working on a mining licence application which is expected to be finalized in the near future, with a mining licence award targeted for the end of Q1 2023.
Ionic is also developing a standalone refinery to separate magnet and heavy rare earths for downstream value addition to metals, magnets, and RE compounds.
It is currently evaluating US locations and downstream collaborations, with a scoping study expected to be completed by late Q1 2023.
Ionic is also investigating an opportunity to recycle secondary sourced spent NdFeB magnets and swarf to produce separated, refined magnet REOs.
A demonstration plant site has been identified in Belfast in the UK and it is expected to be in operation in H1 2023.
Ionic is forecasting a 150% increase in total magnet capacity by 2050, with a significant increase in demand for NdFeB permanent magnets. The company also says EV demand is the main driver as global forecast EV sales is estimated to be set to hit 80M units a year by 2050.
