The Rare Earths Race Is On

The Chinese predicted the importance of heavy rare earths like terbium and dysprosium before the Americans and China developed top scientific talents and spent unlimited money to develop the world’s best technology to produce heavy rare earths.

The French also understood where the world was heading and developed a rival technology that was not as good, and far more expensive, but it worked. The Chinese also had their finger on most of the key known bodies of ore around the world.

And so, when Northern Minerals announced its drilling results from the Brown’s Range in WA near the Northern Territory border, the Chinese wanted to make sure it was part of their network.

At a time when few others were interested, China’s Sinosteel Group came forward to develop a so-called pilot plant to treat the ore. But it also received help from Australia’s ANSTO operation at Lucas Heights.

It was no ordinary pilot plant, costing some $100m, and it produced material that was exactly what the high technology operations in China needed. It is possible that the Chinese have rights over the technology used in the pilot plant, but most say it would be a very doubtful case.

The real Chinese expertise is in the final refining stage. As the importance of heavy rare earths to the western world for drones, missiles and magnets required heavy engineering became apparent, the strategic position of Northern Minerals caused the government to block a Chinese share placement and then finally led to an instruction to sell part of the holding. The shares were sold but to other Chinese groups.

Meanwhile, the Australian Export Bank and the US Export Import Bank have offered support to construct a new plant for Northern Minerals at Browns Range. The $100m pilot plant will remain idle.

The new plant will not process the ore to the same degree as the pilot plant, and output will be trucked to the Iluka Refinery on the WA coast, which is now being constructed with finance from the Australian government and using technology related to the French system.

The base raw material for the Iluka plant is the material from its beach sands operation. But the Northern Minerals material will add to the production levels and the economics of the plant.

By erecting a treatment plant that is different from the pilot plant, Northern Minerals eliminates almost all the risk that they will be challenged for copying Chinese technology.

In addition, the material will be easier to transport by road, which is important given that the distance is much greater from Browns Range to the WA refinery than to the Chinese owned port in Darwin.

But not surprisingly, the Chinese are frustrated that their carefully laid plan to keep Northern Minerals in the Chinese cartel has been thwarted, and this is underlined by the share register and annual meetings challenges.

The Chinese might argue that sitting idle is a $100m plant designed to supply material to China. It is in the interests of Northern Mining shareholders to use it rather than having it be idle. But both The Australian and US governments do not want that to happen.

But Australia has a second heavy rare earths deposit that also threatens the Chinese: Bamboo Creek. The Morgan family which is the major shareholder in the Haoma Mining, which owns the deposit was frustrated that they could not extract gold and platinum from the Bamboo tailings and ore.

The conventional flotation process simply did not work. Normally most would walk away but Gary Morgan who owns the Morgan Research Opinion Polls applied the science of statistics to try and resolve a way of extracting the gold and platinum from the Bamboo Creek material.

He developed the Elazac process over almost 20 years, which he applied to the Bamboo Creek material and is now extracting gold and platinum.

But in the process, it was discovered that there was a high content of heavy rare earths. And that has been confirmed in the analysis of ores from a long trench and cores drilled by BHP drilling for gold in the 1990s.

Morgan believes that the slurry produced in the Elazac process, which contains the heavy rare earths in an iron compound, is in a form that makes it relatively easy to extract the terbium and other heavy rare earths.

That is not yet proven but if it is easy to extract and the material smelted simply then a third global heavy rare earth production system would have been developed to rival the Chinese and French technologies.

Gina Rinehart is a major shareholder in MP Materials, which is in a joint venture in the Middle East to erect a refinery to treat deposits of heavy rare earths in Saudi Arabia.

If the Elazac process can produce a material that is easily separated via a simple smelter, then the western world would have taken another step to escape the Chinese technology grip on heavy rare earths.

One of the essentials in the heavy rare earths’ operation is low-cost energy. The Saudis have that in abundance, but so does Australia, depending on how we price our Northwest Shelf gas.

Given the Australian government’s attitudes to gas, the likelihood is that the Australian Bamboo Creek production will receive its final treatment in the Middle East.

Meanwhile, the US is working feverishly to develop technology that can match the Chinese. But the Chinese are putting severe curbs on the travel of those who understand the details of their unique technology.

No one is sure just how close to the Chinese technology are the plants operated by the Australia’s Lynas Rare Earths, which slipped through the Chinese net.

Meanwhile, the greatest problem for Lynas is that its Kalgoorlie plant depends on renewable energy, which is not reliable and has caused major cuts in production. Renewables and smelters are not a good combination.