The Yukon could one day crack China’s iron grip on the strategically important market for rare earth elements.
Don’t care? You ignore rare earths at your peril. The little-known 15 or so elements classified as rare earths are found in hybrid cars, lasers, cruise missiles, submarine sonar, satellite surveillance, cellphones, LCD screens, wind turbines and low-energy lightbulbs.
Strategic is an understatement. These are the rocks of the future.
The problem today is that the world is running out of them fast. Real fast.
China, which controls 97 per cent of the rare earth market, is expected to have its domestic demand exceed its supply in 2014 or 2015.
“What’s happened in the last 12 to 18 months is the world has figured that out,” said Jim Engdahl, president and CEO of the Saskatchewan-based Great Western Minerals Group.
Engdahl’s company just signed a deal to finance a rare earth exploration site south of Ross River near the Ketza River gold mine. The True Blue property, staked by Vancouver-based True North Gems, is believed to have large deposits of Yttrium, Neodymium and other rare earths.
Great Western will fund an exploration program this summer, said Engdahl.
“It’s pretty hard to say (how well the site will do) at this stage,” he said. “It’s very early.”
But the company, which owns smelters in Michigan and England, doesn’t place bets on just anything, he said. The True Blue met its strict criteria for joint ventures, which includes having good infrastructure and stable politics.
“We are excited about it,” he said.
While the site may be a tiny player in the Yukon’s mineral sector today, the world is fast moving toward dismantling China’s control on the market.
Their dominance is not an accident. Chinese officials saw the need for a strong supply years in advance and began by pumping tonnes of rare earth elements out of one large mine in Outer Mongolia and smaller ones in southern China, said Engdahl.
“They set out to control the rare earth market, which they did,” he said.
Rare earth elements were initially used in breaking up hydrocarbon molecules in the refining business. But the last decade has seen a rapid rise in popularity for the applications mentioned above.
The elements themselves are very difficult to find, said Engdahl. Scientifically, they are mostly found in the lathanite series on the periodic table. They break down into light rare earths and heavy rare earths; the heavy ones being more scarce.
Outside China, there were few mines which survived the onslaught of Chinese rare earths.
And now, even the rare earth monster itself is looking for more.
China has already invested a 25 per cent interest in a rare earth mine in Australia, according to Engdahl. But it was also blocked from purchasing a 51 per cent investment in the Lynas mine by the Australian Foreign Investor Review Board.
“They killed that deal because it’s a strategic element and didn’t want control resting in China,” said Engdahl.
In Canada, the government has not taken a dramatic interest because the demand for rare earths isn’t high.
But the United States is in dangerous need of a new supply.
“The US Defence Department right now is 100 per cent reliant on China for cruise missiles systems and their whole defence department,” he said.
“Any missiles, any aircraft, or anti-cruise missiles - they’re all dependent on rare earths.”
A bill in the United States Congress called RESTART aims to boost domestic supply.
“They truly do need to build reserves in the United States and Canada,” said Engdahl.
Mining companies are jumping on the bandwagon as much as they can; relabelling themselves as rare earth companies even if their reserves are minimal, said Engdahl.
Three years go, there were only a dozen true rare earth companies.
“Today, there’s around 150 to 200,” he said.
But the Yukon should be flattered to have Great Western invest here (it also owns sites in New Brunswick, Saskatchewan, Utah and South Africa). They’re one of the more established rare earth companies and they credit that on remaining a vertically-integrated company.
“We’re unique in the rare earth industry,” said Engdahl. “Outside of China, we’re the only ones with a fully-integrated model.”
On the customer end, Great Western counts on at least one big name to buy its metals: Toyota.
The Japanese car maker uses the rare earths in the magnets for electrical motors. They’re also using rare earths for their batteries, but that supply is coming from China.
Great Western’s other customers are in Japan, Europe and the United States, but Engdahl didn’t want to divulge their names.
As for the Yukon’s rare earth elements site, the impact isn’t likely to be much different than a large quartz mine, said Engdahl.
A mine can be both open pit or underground. Great Western does some of the rare-earth separation on its own when it’s preparing rare earths for magnets. Otherwise it sells the rare earths in a raw state.
Engdahl played down the dangers of Yttrium, which is toxic, and Neodymium, which is radioactive.
“At the mine site, there’s virtually no risks other than their association with radioactive material, like thallium or uranium,” he said.
The policies for dealing with that danger are stringent, he said.
“It’s when you get downstream and you’re making alloys that you get some volatility and you just need to have the equipment and the know-how to deal with that,” he said.
A call to True North Gems was not returned. Yukon’s Energy, Mines and Resources Department was called for details on the regulations surrounding rare earth mining, but it didn’t return calls either.
Contact James Munson at
jamesm@yukon-news.com