May 2022

I recently completed an analysis on the global rare earth element (RRE) industry to see what the opportunities are for expanding production outside of China- specifically the North American market.

There is no shortage of resources, but extraction and processing has been expensive and environmentally challenging.  China has historically seen an advantage due to inexpensive labour, lack of labour and environment protection legislation, and general government support and domestic industry protectionism. In recent years, China’s labour costs have been increasing and the country has improved their labour and environmental policies, thereby, perceivably beginning to level the playing field with those producers outside of China.

There have been no shortage of start-ups trying to take advantage of the RRE resources in North America since 2000 with promising technologies to allow those companies to compete with China but the companies get to certain stage and then fizzle out.

The inhibitor has been the value chain. China has strategically ensured that it controls the value chain from mining to finished goods. Any mining operations outside of China that were not controlled by China have been shut out or forced to sell part or all its operations in order to participate in the downstream part of the value chain. There are some players that occupy the latter end of the value chain outside of China but due to costs, only make-up a small percentage of the total market and not enough of a customer base to make any mining operation profitable.

With the tensions between the US and China growing, the US, feeling the realization and vulnerability of China’s complete control of the value chain of many critical products is in the process of conducting a study to understand the full extent of what it needs to transition domestically to ensure economic and general regional stability and security. Funding has already been given to a few RRE projects in the US specifically to produce key REE for military applications.

Canada has yet to develop a strategy. Given that a large percentage of RREs are located in Canada, political will is necessary for the future of the West.