The Saskatchewan Research Council is attempting to go head to head with China and prove the case for private investment in rare earth minerals by building North America’s first rare earths processing plant.
Rare earths are mined in vanishingly small quantities worldwide, but owing to their magnetic, fluorescent and conductive qualities, they have crucial uses in tech, robotics, low-carbon power and military applications.
The SRC, a provincially owned scientific research facility, has been working since 2020 to establish a plant in Saskatoon to process rare earths, such as neodymium, praseodymium and samarium. The facility there can produce 10 tonnes of rare earth metals a month. By year-end, it is expected to produce four times that much.
By that time, the SRC will be in a position to produce a substantial proportion of the samarium used by the U.S. Department of Defence. The metal is used in missile guidance systems, stealth technology and F-35 fighter jets. In fact, there are discussions under way between the SRC and the
DOD around supplying its samarium, Mike Crabtree, president of the SRC, said in an interview.
“Even at this scale, this plant is strategically important,” he said.
Currently, the rare earths market is dominated by China. The Asian superpower is the biggest global producer with 69-per-cent market share worldwide, according to the U.S. Geological Survey. China’s position in refining is even stronger, with more than 95-per-cent market share, according to Mr. Crabtree.
Now, Canada and the United States are trying to establish a footing in rare earths so they do not have to rely on a hostile actor for supply. But private investment has been rare in North America because of China’s control of the market.
“The Chinese ruthlessly manipulate the market throughout the upstream, midstream and downstream, with the intention of suppressing development of the industry outside of China,” Mr. Crabtree said.
“They manipulate the market to such an extent that private investment here in North America takes one look at rare earths and goes, ‘Well, I can’t, I can’t go back to my investors and say, here’s a 15-year mature financial projection.’ ”
The provincial government has provided $71-million in funding for the plant, while Ottawa has invested an additional $30million. The SRC has sourced rare earth ores from Brazil and, as it scales up production, it plans to procure ore from mining companies in Australia, Southeast Asia, Latin America and South America. Currently, there are no rare earth miners in Canada, so accessing domestic supply is not an option right now. However, there are several Quebec-based developmentstage companies that could provide future supply for the SRC, Mr. Crabtree said.
Jack Lifton, co-chair of the Torontobased Critical Minerals Institute, said that the SRC plant should be commended for being the first of its kind in North America, but the obstacles the council faces to prove it can be viable are enormous. That’s in part because the rare earths market is tiny compared with many other sectors of mining. In 2023, it was worth only US$3.4-billion, according to Fortune Business Insights.
Mr. Lifton also points out that rare earths are not like many other commodities, such as copper and gold, which can be processed in a uniform fashion and stacked in inventory ready to be shipped to customers. Rare earths are made to order for the client, and buyers have very specific and disparate demands, requiring specialized manufacturing processes.
“This is the step they need to overcome in order to be commercial, to make a profit,” Mr. Lifton said. “They need to have an end use customer, a magnet maker, who tells them, ‘Make this alloy, and if the alloy meets our specification, we will pay you.’ ”
The SRC, he says, has “a long way to go, and all these announcements are very overblown and premature.”
Canada’s ambitions on the mining and processing side of rare earths haven’t gone well so far. A few years ago, Australia’s Vital Metals Ltd. was mining rare earths at its Nechalacho Rare Earth Project in the Northwest Territories. Vital attempted to build its own processing plant for rare earths in Saskatoon, but walked away from the project last year after it ran out of money.
When Vital later attempted to sell a stockpile of the rare earths mined at Nechalacho to China, it caused an outcry. That’s because Prime Minister Justin Trudeau had previously praised the company’s efforts to set up a Canadian supply chain that would be independent of China, and Ottawa had provided Vital with $5-million for the plant. The federal government later intervened to broker a deal that saw Vital instead sell its stockpile to the SRC, thus keeping the rare earths in Canada.
Competing with China isn’t easy in part because its capital costs are much lower owing to its loose environmental standards. Processing rare earths necessitates massive amounts of water. Chinese companies typically dump water laced with chemicals used in rare earth manufacturing into rivers, Mr. Crabtree said. The SRC recycles and reuses all of its water and chemicals used in the refining process, but building that recycling capacity is expensive – the total cost of the plant is about twice what it would be in China, he said.
Despite its stricter environmental standards compared with China, the SRC has learned that its end customers are not willing to pay more for rare earths that come from Canada. Mr. Crabtree said it was eye-opening to meet with Germany’s automotive manufacturing association to assess their appetitive for rare earth metals processed in Canada, and learn that the group wasn’t willing to pay anything extra for product compared with what is coming out of China.
To better compete against China, Mr. Crabtree said that the SRC concentrated on building a plant that is far more efficient and that incorporates extensive artificial-intelligence technology. He said that the work of 80 people in China is accomplished by only four people at the SRC, in conjunction with AI.