Canada breaks into rare earth metals market
Published Saturday, October 23, 2010 11:48AM EDT
MONTREAL - Flatscreen TVs, laptops and Apple's iPhones all use rare earth metals, critical to tech devices but largely controlled and produced by China.
It's a market that a number of Canadian companies are trying to enter with their own mining properties in order to compete with and potentially take away market dominance from China.
"The market is only now catching up to the understanding of the sheer importance of these metals," said Peter Cashin, president and CEO of Quest Rare Minerals Ltd. (TSXV:QRM).
Besides TVs, computers and mobile phones, rare earth metals are also used in wind turbines, in iPod earbuds for sound quality, in hybrid electric cars' motors and batteries, and in smart bombs and other defence applications.
China controls about 97 per cent of the production of rare earth metals and has cut back on exports to meet domestic demand and help cut pollution. Japan has been already squeezed in its supply of these metals due to a dispute with China and said Friday it plans to mine for them in Vietnam in a bid to reduce its dependence on the economic powerhouse.
Cashin said he expects to have Quest's Strange Lake property in northeastern Quebec, near the Labrador boundary, in production by 2014 or 2015. He's also interested in finding a partner to refine the metals.
He said there's enough rare earth metals, both light and heavy, at the Quebec property for an estimated 65 to 100 years of production.
"That speaks very well to the security of the supply that's got the United States and other western governments concerned about their ability to obtain those important rare earths," he said.
Though they're called rare earth metals and may have been considered so when they were discovered at the end of the 18th century, they're not actually rare or in short supply.
They're a group of 17 similar metallic elements whose names aren't exactly common to everyday vocabularies, such as cerium, terbium, dysprosium and neodymium.
So-called "heavy" rare earth metals are particularly sought after because they're critical to the production of magnets found in wind turbines, computer hard drives and electric motors, and can tolerate very high temperatures.
Analyst Jack Lifton said the Chinese have cut back on production because they have to meet their own domestic demand and they're worried they're going to run out of the metals.
Lifton said Canadian companies could be the closest to producing an alternate supply of "heavy" rare earth metals, citing Saskatchewan-based Great Western Minerals Group Ltd. (TSXV:GWG) as an example.
"The world is waiting for a Canadian company to start producing heavy rare earths," said Lifton, founding principal of Technology Metals Research in Detroit.
"The heavy rare earths are critical to the production of modern magnets that can operate at high temperatures."
Great Western has a mine in South Africa that's expected to be up and running in 2013, said James Engdahl, president and CEO. A separation facility for the metals is also planned, he added.
"By 2013 when we're in production, we see ourselves growing substantially," Engdahl said, adding that the company may make an acquisition or two.
"We believe the potential in South Africa to produce maybe as much as 10,000 tonnes a year is very realistic," he said from Saskatoon.
Engdahl said the mine will be able to produce the in-demand "heavy" rare earth metals.
Great Western, which also processes the metals, has been buying them from China for 18 years. But Engdahl said the company also processes rare earth metals in England and Michigan.
"We are the only ones that make alloys basically outside Asia," he said.
Lifton said he also likes Avalon Rare Metals (TSX:AVL), but he said it will be financially challenging for the Toronto-headquartered company to get the heavy earth metals out of the ground due to infrastructure costs at its property in the Northwest Territories.
"If they can do that, Avalon will become the world's premier supplier of the world's heavy rare earths and the Chinese will buy from them and everybody will be happy."
Engdahl said rare earth metals have changed everyday life and "miniaturized" devices.
"If you went back to the '60s and you had a big black-and-white TV, that's what the world would be like without rare earth magnets in them."