New Network Aims to Fast-track Canadian Rare Earths Projects

Construction to begin on Canada’s first rare earths mine within a year

An employee works on a machine that recycles rare earth elements at a factory near Lyon, France. A new network has been formed to boost the rare earths sector in Canada. (Philippe Desmazes/AFP/GettyImages)

Getting Canada’s rare earths sector up and running has taken a step closer to reality with the formation of a network that seeks to boost the sector in a variety of ways.

Bringing together a wide range of industry players, the Canadian Rare Earth Elements Network aims to enable Canadian producers and processors to supply at least 20 percent of anticipated global demand for rare earths within five years.

Rare earth elements are essential components in a wide range of electronic devices such as cellphones, televisions, and computers. Nearly all of the world’s supply comes from China, which in recent years has been accused of using its monopoly of the industry as a geopolitical weapon by cutting back exports in an attempt to boost prices. 

Avalon Rare Metals, whose consultant, Ian London, was instrumental in forming the new network, is planning to begin construction on Canada’s first rare earths mine in the Northwest Territories in the next year. 

However, capital has yet to be raised for the $1.5-billion Nechalacho project, a daunting figure for investors given that the global economy is still not fully recovered.

“The biggest challenge still is putting the financing in place,” says Avalon president Don Bubar.

But the wheels are in motion now that the government has approved the project and the feasibility study has been completed—key steps in securing financing. 

“You actually have to demonstrate to any banker or financial institution that’s looking at providing capital that you do indeed have consumers who are willing to commit to buying the product at the end of the day,” Bubar said.

“That’s really the key hurdle—securing sufficient off-take commitments from end users to support providing the capital to build the project.”

In announcing approval of the project on Wednesday, Bernard Valcourt, Minister of Aboriginal Affairs and Northern Development, said the mine will be a boon for NWT.

“The Avalon Rare Metals Inc. Nechalacho Project represents a tremendous economic opportunity for the Northwest Territories and will lead to jobs and benefits for Northerners,” Valcourt said in a press release.

The project now moves into the regulatory phase.

Canada is positioned to become a world leader in rare earth development, Bubar notes, as it has a uniquely rich, high-grade deposit of heavy rare earths.

Countries such as Australia, the U.S., and Africa are Canada’s main competitors in the race to develop rare earth alternatives to China, which has about 30 percent of global deposits but accounts for more than 85 percent of production. 

China alarmed foreign companies by limiting exports in 2009, in a move to capture more of the profits for its domestic market.

In response, the U. S., Japan, and the EU filed a complaint at the World Trade Organization last year. China opposed the release of the WTO report about its export curbs this week, following media reports that the document rejects Beijing’s policy as a trade violation.

Canada’s newly formed network is timely, says Bubar, and hopes it will accelerate commercial production of rare earths to facilitate the first North American alternatives to China.

“We felt that Canada needed to make a strong statement internationally that it was interested in supporting the emergence of the rare earth industry in Canada and saw it as important,” he says. 

“The ultimate solution on building out the supply chain outside China is going to involve participation from players in a number of different countries working together.”

Canada’s rare earths are worth $206 billion, according to a Chamber of Commerce report released last year.