Q&A series: How to build an RE supply chain - Part 1

Covid-19, the US-China trade and technology war and past and current trade disputes are focusing minds across the world on supply chains and industrial priorities, while the deepening economic crisis appears to be working both for and against a shake-up of the manufacturing base.

In the first of three interviews with rare earths producers, Argus spoke with alloy and metal maker Less Common Metals (LCM) about building a sustainable supply chain for the rare earth magnets that are vital to automotive, electronics and manufacturing, and about its experience of operating in one of the world's most politically and economically brutal sectors.

Twenty-five years ago, the predecessor to LCM, which is based in northern England, supplied magnet makers in the UK. Today, there is only one magnet maker for the automotive sector left in Europe, Germany's Vacuumschmelze. Two years ago, LCM, with a staff of just 41, expanded into magnet metal and is now the only producer of neodymium metal outside Asia-Pacific.

Argus spoke with managing director Ian Higgins. Edited highlights follow:

How easy was it to start out in the rare earth industry and expand from alloy into metal? Not easy at all. In 27 years, LCM has had three changes of ownership, two relocations and migration to ISO quality and environmental standards. We've enjoyed good periods of rapid growth but also hard times. And as for adapting the process for making neodymium metal to meet western health and safety standards, you could say that a 1,000-mile march starts with a single step.

How can the industry grow outside China? Integration in some form or another and the low cost of raw materials are two fundamental considerations. To make the six stages of the process economically viable from raw material to oxide to metal to alloy right through to rare earth magnet, we must find a way to stop all of the stages stealing margin from one another until the whole thing collapses and is financially unsustainable. Remember if you go to a tier-one OEM [original equipment manufacturer] in the automotive industry, they will say why should I pay $50/kg for magnets when I can get it for $45/kg from another supply chain in China?

Let's look at two aspects — the cost of raw material and the cost of transparency and environmental standards. In the Chinese model, they primarily have the initial light rare earth feed as a by-product of Inner Mongolia iron ore processing. I do not know how they do their accounting but they put it on the iron ore side of life. This means they start with a low cost or zero cost feed.

Now for heavy rare earths the cheapest mining method is extremely polluting and has now been mostly shut down, which is why China is dependent on importing more heavy rare earth ore from Myanmar [Burma] which creates a different cost equation. Overall, part of the lower cost that China is able to achieve is the result of less stringent environmental health and safety standards, but it is not the overriding factor. Chinese processing is efficient anyway. It would not quadruple the price if you had improved health and safety.

Historically, production of rare earth concentrates, especially in northern China, has been extremely polluting, creating a legacy of toxic dumps. Transparency about these upstream processes is essential. Let's say you are making a light mixed rare earth concentrate and the cost is $2.50/kg and your cost is $3/kg because you processed it ethically at a plant in say, Thailand, and water treatment added 50¢/kg to the cost because your requirement is that the radioactive nuclides are in a safe form. That cost must be communicated to the end consumer.

How can industry help policy makers navigate such a complex industry? If you look around the world there are around 50 prospective rare earth ventures with varying levels of credibility. I am working with a project for the European Institute of Innovation and Technology to develop a methodology for cataloging and tracking all these prospects and putting the information in a form that makes it possible to take objective decisions, with oversight from independent experts.

There are similar discussions under way in the UK. No one country can or will have everything needed to become supply independent. There are also about half a dozen disruptive technologies trying to challenge the incumbent technology for separating rare earths.

I think it is clear at this stage that if you really want to build a rare earth supply chain outside China, there will have to be co-operation between countries and some kind of mix of public funds and private capital.

LCM is involved in a project with one of the technology disruptors, REEtec in Norway? Yes the SecREEts project which is part funded by the EU Horizon 2020 project unites Norwegian fertiliser producer Yara, which would supply rare earths as a by-product to REEtec, which will then use its proprietary technology to produce rare earth oxides that LCM would then make into metal. We think we are the closest to market, although we are not there yet.

The SecREEts project is small in commercial terms. Are there larger opportunities for using by-products to produce rare earths? Yes certainly, there are a lot of untapped resources all around the world. The minerals monazite and xenotime are good examples. These occur as by-products of heavy mineral sands processing globally. Both contain rare earths together with radioactive nuclides. The problem is how they can be processed ethically. My very first job out of university was with the UK Atomic Energy Authority, where radioactive materials are handled and processed in a responsible manner.

A simple example is the mining of beach sands in India in Tamil Nadu on the east coast. They mine a titanium bearing mineral ilmenite and natural garnet which they sell and grade along with small amounts of zircon. By the time they have finished, all they are left with is silica (sand) and monazite. Because of Indian state rules about radioactive minerals, they take out the monazite and stockpile it and put the silica back on the beach. The monazite is stuck in a stockpile. Does it sit there forever?

One way forward would be for the Indian government to change policy to allow responsible processing of this valuable resource by private enterprises. Alternately, to advance processing of global stocks of monazite and/or xenotime, could the UK play a role through the creation of a government-controlled repository for radionuclide by-products under the control of the UK Atomic Energy Authority in the same way it controls nuclear fuel processing in the UK?

By Caroline Messecar

Related News