Rare earths
Why motors matter
In the flurry of activity surrounding the EV rush, battery materials like lithium, cobalt, and even manganese parade across headlines and seduce investors into providing more than generous sums of money. The attention they receive is well-deserved; batteries are large and expensive, and nobody knows which chemistries will prove to be triumphant in the burgeoning landscape.
Equally as important, yet more often overlooked, is the role of the motor. Engineers have long determined that permanent magnet-based motors are the most efficient. This is crucial in the world of EVs, as a car with a less efficient motor will need a larger battery to meet the same driving range. As the battery is the most expensive component, even when prices rise for the rare earths used as motor material, these prices never soar high enough to justify making the battery itself larger. According to Christine Burow, VP marketing of Torngat Metals, approximately 95% of passenger cars use permanent magnet-based motors for the drivetrain, a trend she anticipates will continue.
“To get a sense of demand, first look at the number of passenger cars that will be electrified globally and the targets set out from governments and auto makers,” Burow explained. “Next, multiply the number of passenger cars by rare earths required for the motors, and you will arrive at a number so large that China could not supply all of it even if it wanted to.”
A dirty myth
When rare earths do gain media attention, they are oftentimes cast in a negative light. This is because China historically dominates the rare earth elements (REEs) market, and for several years, the country mined without consideration for the surrounding people, communities, and environment.
China became a net importer of REEs in late 2018 when policies emanating from Beijing outlined guidelines for production and onsite processing that called for an end to damaging mining practices. As a result, nearly 20% of global production that had previously come from ionic clay deposits in South China was shut down. Rather than solving the problem, however, many experts in the rare earths space argue the policies simply encouraged China to export its environmental malpractices to neighboring Myanmar, which now supplies the economic powerhouse with REEs mined in horrible working conditions while fattening the pockets of the Myanmar junta. Geopolitically, this presents a stain in any automaker’s supply chain and has contributed to the myth that REEs can only be mined in an environmentally destructive manner, supporting the narrative that rare earths play a counterproductive role at best in reducing the world’s dependence on fossil fuels.
Even if purchasers of rare earths were to overlook the troubled origins of this supply, they still would not be able to receive the quantities needed in today’s market. China has identified rare earths as critical to its industrialization, making it clear it would rather make cars to be exported than sell rare earths or magnets directly. As the global demand for rare earths rises, the world’s top producer may cease exporting within the next decade.
"On the public level, Québec is already investing heavily in rare earth exploration projects. One could question whether Québec’s protectionists rules, particularly regarding foreign investment, negatively impact the influx of cash from foreign sources to bolster mining activity."
Benjamin Gross, Partner, Borden Ladner Gervais LLP
Québec spies opportunities
It is within this context that mining projects for rare earths in Québec are beginning to turn heads, as companies are committed to proving it is possible to carry out a profitable rare earths operation with high ESG standards in a geopolitically stable environment while still being cost competitive with Chinese producers. In May 2022, Rio Tinto announced the production of its first batch of high purity scandium oxide at its commercial scale demonstration plant in Sorel-Tracey, Québec, making it the first North American producers of the critical mineral that goes into solid oxide fuel cells and aluminum alloys.
"The permanent magnet value chain needs a long-term, sustainable, secure supply of REE. We want to position ourselves as one of these suppliers," said Burow.
Torngat is a privately-owned company focused on rare earth elements used in permanent magnets such as dysprosium, neodymium, and praseodymium. Its flagship project, Strange Lake, has one of the largest rare earths deposits in the world and is notable for its quantity of heavy rare earths.
Commerce Resources has also been working to put Québec on the rare earths map. The company began conducting due diligence in the space back in 2005 and discovered that over 80% of REEs were hosted in a single geology: carbonatites. “Furthermore, of hundreds of different minerals that can host rare earths, only four were ever commercialized. That has not changed in the last 17 years despite over a billion dollars of unsuccessful R&D metallurgy attempted on those other minerals,” commented president Christopher Grove.
“The approach to get critical and strategic metals out of the ground today requires different methods, technologies, and processes which are sustainable and more cost effective, yet extractive metallurgy for critical and strategic metals has not improved greatly over the last 50 years.”
Kiril Mugerman, President and CEO, Geomega Resources
Commerce Resources holds the world’s largest monazite dominant defined resource of REEs hosted in a carbonatite, which Grove believes to be the most attractive fundamentals for an REE project when compared with the geologically similar Bayan Obo mine in China that currently produces over 40% of the world’s supply of rare earths. “At Ashram, mineralization starts at surface, and we have drilled the deposit down to below 600m, which gives us potentially hundreds of years of production,” said Grove of his company’s flagship asset.
Within the past 17 years, there has been only one successful, commercially significant new producer of REEs: Lynas in Western Australia. Yet Lynas alone hardly makes a dent in global annual demand. Grove hopes the scale of the Ashram deposit will be a game changer. Fortunately, the project resides within a jurisdiction that views REE exploration as necessary for future decarbonization. Québec’s government has invested directly into these types of projects, such as Ressources Québec’s private placement financing of Commerce Resources in 2017, and has worked to align stakeholders.
The province is also a strong candidate for the development of other steps in the value chain. While making the metal from the oxide is energy-intensive, Hydro-Québec’s provision of low-cost, green electricity makes this acceptable from an environmental standpoint. Furthermore, the process is similar to aluminum smelting, which the province has experience with at its aluminum smelter in Bécancour.
As global magnet demand surges, Québec-based Geomega Resources is constructing the world’s first sustainable rare earths recycling facility. The company is building a commercial demo plant in the greater Montreal area that will be able to process up to 1.5 tons of magnet scrap per eight-hour shift. “This is going to be the first facility of its kind in the world and the first rare earths magnet recycling facility outside of Asia,” commented president and CEO Kiril Mugerman.
The EV train has left the station, and the need for REEs will only intensify. If Québec can develop an economically viable alternative to Chinese supply, it will be a huge step towards making the green revolution even greener.
Image courtesy of Commerce