Rare Earth Elements: The Seventeen Metals Crunch

Factors to consider when reviewing the explorer/developers include the skills base within the company, the likely access to capital (rare earth projects are expensive), the political risk and the required infrastructure (many are in remote places). The development stage of the project is also an important consideration as (a) rare earth projects are complex and take longer than those of other commodities particularly as they require a pilot plant to test the complex metallurgical process and (b) in a relatively small market first mover advantage is important.
Particularly crucial too is the quality and metallurgy of the orebody: Is the mineral amenable to REE recovery? Are there contaminants and if so how will they be treated? What is the grade of the REE? What proportion of the resource are valuable heavy rare earth elements and what proportion is light?
The Rare Earth Elements (REE), a group of seventeen metals crucial to much 21st century technology, have been hot news recently. The number of applications for the metals is spiralling and demand is rising. But China, which produces 97% of world supply, has cut its export quota by 72% for the second half of 2010 and announced that it has only limited resources of the critical 'heavy' rare earth metals. Meanwhile recognition of the strategic importance of rare earths is growing.
An act was recently tabled in the US to take all necessary initiatives to reintroduce a domestic rare earth supply chain so as to ensure a secure source of these vital metals. Countries such as Korea and Japan, both heavily dependent on the metals for hi-tech manufacturing, are scrambling to secure future supplies. Prices of the rare earths are soaring, up on average by 300% between January and August 2010, with the rises for each individual metal ranging from 22% to as much as 720%.
A number of companies have already latched on to the opportunity presented by a looming supply shortage in some, (though not all) of the metals. There are many exploration , development and mine restart projects on the go outside China. However the mining and processing of rare earths is not an easy task. The metals are often found with radioactive elements such as uranium and thorium which makes them subject to stringent environmental restrictions. Moreover since the metals are always found together, albeit in varying combinations, they are difficult and expensive to process; the oxide of each metal must be separated and purified sequentially which is not an easy job as the metals are chemically similar. Since each orebody is unique each has different processing requirements, but there has been considerable loss of expertise in the West during the era of Chinese dominance of the market.

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