Closing the gap with China in the production of critical metals is likely to prove more complicated and take longer than expected, according to two recent cautions.
Rising prices and delayed finishing an Australian planet are the first warning.
The second blow was a new industrial ban imposed by China on specialized rare earth production equipment, meaning that the competition will have to expand its own processes to extract the right amounts of metals needed for the technologies.
Rare earths have been a Chinese specialty for decades thanks to gigantic ore deposits and clever extraction and processing strategies that have evolved just in time to meet growing demand.
While those aren’t surnames, it wouldn’t be imaginable to rule the modern world without neodymium, praseodymium, terbium, or dysprosium, four of the 17 elements that make up the rare Earth family.
Rare earth magnets are found in a wide variety of technologies.
Permanent magnets used in electrical appliances rarely use earths, as do rocket steering systems.
China’s dominance of the rare earth supply chain has enabled it to dictate prices in a way which has largely thwarted competition, with a handful of exceptions.
Australian company Lynas Rare Earths survived a China-orchestrated price collapse thanks to its close ties to Japan, but its chief executive, Amanda Lacaze, remains cautious about the plans of companies with ties to China. China seeking to identify itself in the Australian rare land industry.
U. S. mining corporation Molycorp collapsed a brutal era of planned oversupply, which Lacaze described earlier this month as a marketing scheme “to drive down prices” over a long period of time.
“We survived because the Japanese government held our hand very tightly that time and supported us,” he said.
Long-term, low-interest financing from Japan has made Lynas the largest supplier of rare earths outside of China.
China’s latest move to thwart its rare terrestrial rivals is a ban on exporting the technologies it has developed to master the complex processing of materials, which in some cases are radioactive.
The new restrictions, according to China’s Ministry of Commerce, are aimed at “safeguarding the country’s security and economic interests. “
The supply of finished products is not affected, but by limiting access to ore processing, metal refining equipment and know-how will delay the plans of emerging rivals, extending China’s grip on the rare earth business.
More delays in access for competitors are also likely to occur, as developers in other countries face planning, design, and structure hurdles.
The last time it faced a potential Chinese rival was at the Eneabba rare earth refinery, a task of Australian mineral sands mining company Iluka Resources.
Originally budgeted to cost around $860 million the latest estimate is closer to $1.1 billion with Citi, an investment bank, telling clients last week that the capital cost of the refinery could blow out to $1.25 billion.
“Iluka has also indicated that production at the new refinery will not occur until 2026,” Citi said, adding more than 12 months to the original schedule.
Design paints for the refinery are being carried out through Fluor, a US engineering company, which works with Iluka on the basic aspects of the refinery, such as cracking, leaching, purification and solvent extraction.
The main points of the rare earth-processing technologies that have just been put on a list of banned exports by the Chinese government are known, but they are very likely to fall within the scope of what Fluor intends to do at Eneabba.
Demand for rare earths is strong, but so is China’s grip on supply.