Rising demand for rare earth elements (REEs) represents a multi-billion-dollar opportunity, and Ucore Rare Metals (TSXV:UCU), a little-known critical metal separation tech stock, is uniquely positioned to capitalize on it.
The global REE market is expected to reach US$32 billion by 2030, according to internal Ucore projections, from estimates as low as US$5.3 billion in 2021. This tailwind for stocks in the space stems from REEs’ essential role in our increasingly tech-dependent lives. Key applications include:
- Phosphor production for ray tubes and flat panel displays from smartphones to televisions to stadium scoreboards
- A variety of mission-critical defense technologies, including F-35 combat aircraft
- Up to 50 per cent of the material of any given digital camera lens, including cell phones
- Magnets for solid-state computer hard disks and CD–ROM and DVD disk drives, as well as conventional automotive subsystems, such as power steering, electric windows, power seats and audio speakers
- Production of REE permanent magnets for the US$388 billion electric vehicles (EVs) market. REE permanent magnets are the most cost-efficient method to convert electrical energy to mechanical energy, requiring as much as 10 to 15 kilograms of REEs per EV. REE magnets are also the most dependable and durable for offshore wind turbines, granting them a leading share in the more than US$30 billion market
REEs’ widespread use makes them a key pillar for North American national security, especially when we consider the U.S. and Canada’s considerable reserves, their lack of REE infrastructure, and China’s control of more than 60 per cent of global REE mining and more than 90 per cent of component manufacturing.
The U.S. currently relies on China for more than 70 per cent of its rare earth elements, creating a pressing need for a domestic supply chain to remain technologically competitive on the global stage. This will require partnering with companies that can ramp up REE refining capacity in a cost-effective fashion, with special emphasis on the complex transformation of upstream feedstock to midstream rare earth oxides, which are then used for metals, alloys, magnets and other downstream components.
Ucore’s unmatched RapidSX REE separation technology
Backed by a management team with 22 per cent insider ownership and long-established expertise in the auto, critical mineral and renewable energy industries, Ucore Rare Metals has made tangible progress towards de-risking the North American supply of rare earth elements through its RapidSX separation technology.
The patent-pending technology, acquired in 2020, uses column-based solvent extraction to separate light and heavy REEs (LREEs and HREEs) from upstream feedstock. Heavy REEs include dysprosium (Dy) and terbium (Tb), which are integral to defense, clean technology and EV solutions, while light REEs include neodymium (Nd) and praseodymium (Pr), which can be found in motors, turbines and medical devices.
Unlike conventional solvent extraction (CSX), Ucore has demonstrated that RapidSX can mix the loaded aqueous and barren organic solutions in the separation process without a powered mixing tank, requiring 70 per cent less floor space compared to CSX, while achieving an up to 7x faster throughput, in addition to:
- The same proven chemistry as solvent extraction
- A processing facility that will be about one-third the size and require one-third the construction budget compared to CSX
- Modular and scalable process lines, opening the door for licensees and joint venture partnerships for in-situ production
- A closed-loop system
Independent evaluations of RapidSX have shown it to be at least 3x more efficient than CSX, creating a globally relevant, multi-billion-dollar value proposition, which Ucore is putting into practice through its RapidSX HREE and LREE separation and original equipment manufacturer (OEM) qualification facility in Kingston, Ontario.
The facility’s 10 tonnes per annum (tpa) demo plant, the first of its kind in North America, is gearing up to demonstrate the techno-economic attributes of RapidSX with ongoing testing and optimizations, and is capable of processing oxides, oxalates, hydroxides and carbonates, among others, derived from bastnasite, eudialyte, ionic clay, monazite, xenotime and other mineral sources, granting the company diversified exposure to feedstock suppliers. This is in addition to future supply from Ucore’s Bokan REE project in Alaska, the highest-grade NI 43-101 HREE resource in the United States.
With the goal of producing REE oxides by 2025 – including yttrium (Y), Pr, Nd, an NdPr compound, Tb and Dy – Ucore has embarked on a journey that will span thousands of run-time hours through 2023 and 2024 to scale up its technology and optimize it for OEM qualification.
Data gathered from the demonstration facility’s product qualification trials and the techno-economic assessment is being applied to ongoing development in Louisiana of North America’s first full-scale REE refinery, which is expected to be production-ready by the second half of 2024.
Ucore’s proposed refinery, known as a Strategic Metals Complex (SMC), will be able to produce 7,500 tonnes of REE oxides per annum, only a 9x scale-up from Kingston, while benefiting from numerous government incentives (slide 11) and developing offtake agreements (slide 19),positioning the company to capitalize on RapidSX’s technological advantage and bolster North America’s REE oxide production through additional SMCs across the continent.
Validation from leading governments
Complementing Ucore’s recent US$4 million funding award from the U.S. Department of Defense – which will be used to demonstrate RapidSX’s superior processing scale and efficiency for heavy REE magnet materials, including Tb and Dy – the company has won an additional C$4.28 million from the Government of Canada to qualify its light REE magnet materials for commercialization.
The demonstration will involve the production of nearly continuous high-purity samples of Pr, Nd and an NdPr compound, and the processing of 13-15 tonnes of mixed rare earth carbonates and oxides from numerous Canadian and U.S. feedstock sources.
The company is confident it will meet qualifying specs for critical magnet materials with automotive, wind energy and consumer OEMs during the value-accretive project. It expects total reimbursed expenditures of C$4,275,848 out of a total budget of C$8,308,441 during the project, which runs until March 31, 2025.
The award coincides with rising concerns about near-term global REE supply for electrification and other green initiatives after China’s increased scrutiny over the export of rare earth elements.
With funding in place to confirm RapidSX’s market viability across the full breadth of the REE supply chain, third-party data demonstrating RapidSX’s unmatched efficiency, and endorsements from two of the world’s leading governments, Ucore is ideally situated to catalyze the growth of North America’s REE supply chain while benefitting from the consistent deal flow only proven technologies can command.
The gift of a clueless market
Ucore’s robust technological offering and exponential advantage in separating REE oxides make it a key company to align North America-friendly feedstock sources towards vertical REE supply integration. That said, the eventual commercialization of RapidSX and its potential to occupy a long-term role in North American midstream REE processing has been anything but priced into Ucore’s stock.
With shares down by 41.44 per cent since 2018, the market has turned away from the company’s differentiated technology, established tailwinds in REEs and EVs, and aligned management team, which has secured three feedstock agreements amid ongoing discussions towards numerous offtake agreements on the road to revenue generation.
The average investor’s reticence to take a position in Ucore before the Louisiana SMC is fully operational, despite RapidSX’s third-party validation, represents an opportunity for seasoned market participants to lock in a valuation with zero recognition of the leading-edge technology, future demonstration plant development on other critical metals, such as lithium, cobalt and nickel, or the company’s numerous strategic upstream and downstream partnerships still to come.
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