HONG KONG – One of the world’s last rare earth metal processors outside China is buying mining rights in Greenland to reduce dependence on Russian ore and stabilize prices, in the latest move by the company. Western companies to diversify supply chains after Russia invaded Ukraine.
Rare earth metals are essential to the manufacture of many modern products, including electric car engines, offshore wind turbines and smart bombs. Demand has skyrocketed as automakers shift more production to electric vehicles.
Dozens of mostly small companies mine rare earth ores around the world and do some initial treatment to remove the dirt. But there are only two commercial-scale plants outside of China that perform the daunting task of separating primary ore into usable material for magnets in electric car engines and other applications.
Toronto-based Neo Performance Materials purchases primary ore from Russia, the United States and Australia and performs chemical processes at plants in Estonia and China. Another company, Lynas, mines rare earth metal ores in Australia and does the chemical process in Malaysia.
Neo said Monday that it is buying the rights to mine rare earths in Greenland from Hudson Resources, a small mining company based in Vancouver, British Columbia. The acquisition is the first move in the field of rare earth mining by Neo, whose Magnequench division is a descendant of a former General Motors subsidiary that has pioneered many modern magnetic applications of the metal. rare earths in the 1980s.
GM then saw little potential in electric cars and phased out operations in 1996.
Constantine Karayannopoulos, Neo’s chief executive officer, said his company plans to start mining and processing ore in Greenland within two to three years, with full production in about five years. The primary ore will be delivered to Neo’s chemical separation plant in Estonia, a former Soviet republic on the Baltic Sea in Eastern Europe.
Neo’s goal is to unleash the need to buy ore at world prices. These prices fluctuate more widely than most commodities, increasing tenfold during periods of geopolitical tension before falling when tensions ease.
“I want the flexibility to supply 100% of my production myself or 50% of my own and buy in the market,” Mr. Karayannopoulos said in a phone interview. Having a reliable local source of raw materials will help sell rare earths at a fixed price in long-term contracts with car manufacturers, making it easy to deploy electric cars, he added. and more predictable financially.
Neo is also preparing to begin construction this winter on a plant in Estonia to turn treated rare earths into magnets for electric car engines. With European carmakers rapidly shifting production to electric cars, the European Union is providing financial support to create a mine-to-magnet supply chain in Europe for rare earths. .
Although geographically Greenland is part of North America, it is an autonomous county of Denmark, a member of the European Union.
The Estonian plant now buys three-fifths of its rare earth ore from Russia and the rest from Utah. The West has imposed many sanctions and other restrictions on companies and goods exported from Russia, but not yet on rare earth metals.
Neo is not the first company to try to mine rare earths in Greenland. A consortium including a Chinese state-owned enterprise attempted to open a mine in the southernmost tip of Greenland several years ago, at a rare earth mine that also contained significant amounts of uranium. That project has been blocked by rivals and local regulators worry about the risk of radioactive contamination into the environment.
Don Hains, a Canadian geologist who has advised Hudson Resources in Greenland and will now become a consultant to Neo, said the Sarfartoq deposit acquired by Neo was 97% less radioactive/ tons against deposits at the southern tip of Greenland.
“The radiation levels in Sarfartoq are lower than what you would see sitting on the granite rocks next to the ocean in Maine,” he said.
The Sarfartoq mine, on the west coast of Greenland, is also considerably smaller than the one at the southernmost tip of Greenland. But Mr. Karayannopoulos said the Sarfartoq mine still has enough rare earths to meet Neo’s entire worldwide processing needs for at least 30 years, and possibly a century if deeper drilling at the edge of the mine will determine get more rare earth ore.
Ocean currents along Greenland’s west coast keep it from freezing during the winter, making it easier to ship primary ore to Estonia, Hains said.
Rare earths, a group of 17 elements near the bottom of the periodic table, are not radioactive, but radioactive contaminants such as uranium and thorium occur naturally in rare earth deposits. Controversy over how to handle those contaminants has led to the closure of rare earth separation plants over the past 40 years in Japan, Australia, France and the United States.
That has made China the main rare earth miner and diver in the world. Russia is the fourth largest producer of rare earth metals.
The United States and Australia have been closely linked for a long time in the mining sector. Almost all of the American ore is mined in California and goes to China for processing, although some is produced in Florida and processed in Utah. President Biden and Governor Gavin Newsom of California announced plans in February to subsidize the restart of chemical separation in California.
Since then, rare earth metals have been a highly visible industry China stops exporting to Japan for two months in late 2010 during a territorial dispute.
Rare earths are essential but are mainly used in trace amounts, so the actual value of this industry is very small. Industry analysts estimate the value of rare earth ore sales worldwide at around $2 billion, and the value of fully processed magnetic powder and other rare earth materials at nearly $8 billion.
Neo said it will make an initial payment of just $250,000 to Hudson for mining rights, followed by $3.25 million when the government of Greenland approves the transaction. Mr. Karayannopoulos said he discussed the plan with officials in Greenland prior to the deal and was optimistic it would not be blocked like the separate China-backed project.
Neo is forming a new subsidiary to make the purchase and has agreed that Hudson will be entitled to 5% of the proceeds from the subsidiary’s sale or initial public offering within 5 years.
Automakers in the United States are beginning to make requirements similar to those of European carmakers for the supply of rare earths from mines to magnets near their assembly plants. GM announced plans in December to buy magnets for electric motors from a plant built in Texas using rare earths from California.
Mr. Karayannopoulos predicts that the US auto market will develop in the same direction as Europe.
“Once we prove this in Europe, I want to do the same in North America,” he said.
