Heavy rare earth demand to keep climbing

Aclara Resources (ARA.TO) is a company listed in the Toronto Stock Exchange. As a spin-off company of Hochschild Mining, the company focuses on the development of its Penco rare earth project in Chile. With a mining life of more than 10 years, Penco rare earth project's content of dysprosium and terbium reaches 5.5% of TREO. The company aims to produce clean rare earth in order to become a leading supplier of choice for clean-tech companies and technologies integral to green energy.
Asian Metal: Thanks for accepting my interview, Ramón. Please introduce your company briefly.
Ramón: It’s a pleasure. Thank you for inviting me. Aclara Resources (ARA.TO) is a company listed in the Toronto Stock Exchange. It is a spin-off company of Hochschild Mining, a company that is 110 years old. In December 2021, we raised US$100 million in equity to develop an ionic clays deposit in Chile, which is very similar to those found in China. We have completed an independent economic assessment with very positive results with the help of Ausenco. At Aclara we are moved by the opportunity to supply very scarce heavy rare earths in order to make the electric revolution happen and to significantly contribute with the decarbonization of our planet.

Asian Metal: What’s the major advantage of your heavy rare earths deposit located in southern Chile?
Ramón: We have an ionic clays deposit that is quite unique, containing all rare earths and a particular enrichment of dysprosium and terbium. The mineralization is very similar to that of Southern China. It’s a supergene deposit going down to 40 meters in some areas. We have developed a process around it that allows us to extract its valuable rare earths through a very simple and clean process. There are no explosives, no crushing, no milling and no tailings dam. Our main reagent is fertilizer. And most importantly, we do not generate radioactive wastes. Being able to produce clean rare earths in Chile is our main competitive advantage.
Asian Metal: What’s your method to produce clean rare earth?
Ramón: The clean rare earth is produced without negative environmental impact or radioactive waste. Our process has been designed to have a controlled reaction between the clays and the fertilizer in an enclosed tank. As far as I learn, most of the mining occurs by in-situ leaching in China. We are going to make the reaction happen in a controlled way. Conserving water is a top priority, so our recirculating rate could reach up to 95%. Also, the clays will be redeposited back and we plan to grow a forest with native species of trees on top of them. Although there is no human activity in that area, in our case we have still developed a process that is absolutely unique in the industry. We will carefully remove the rare earths from the clays and we will leave behind a conservation park. Our goal is to supply customers who find value in buying rare earths from a company that can ensure them a clean supply chain.
Asian Metal: What’s your opinion of rare earth industry development prospect in the coming five years?
Ramón: The market will experience a very tight supply of rare earths with magnetic properties. Already in 2021, when China shut their border with Myanmar and stopped the flow of heavy rare earth concentrate for magnet production, neodymium oxide prices increased by 82% and terbium oxide prices by 53% YoY. The price increase continued in early 2022, up to a point where neodymium oxide prices reached USD190/kg and terbium oxide prices recorded around USD2,387//kg. The price increase was exacerbated by strong demand from EVs and wind turbines. I believe that the rare earth projects that generate radioactice wastes will hardly get approval and will face opposition from different stakeholders. Ionic clay deposits will definitely own advantages but there are only few ionic clay deposits in the world, which results in tight supply of heavy rare earth. China is also making important efforts to improve their environmental standards, a move that is very favorable for the reputation of the industry. But Chinese supply is also going to be limited. At the same time, from the demand standpoint, we are in the very early days of the electric revolution. EVs and wind turbines industries are in the early stages of development. We are about to see an explosion of e-boats, e-planes and drones, as well as other applications, which will all require rare earths to be efficient and viable. My opinion is that, with limited supply and exponential demand, prices will continue to move upwards. In the end, even despite the continuous high prices, there will not be rare earths available to all consumers. Only companies who act now will be able to win enough source supply.

Asian Metal: What industry do you see as the most promising downstream industry of rare earth?
Ramón: NdFeB magnet industry is the most promising downstream industry of rare earth. NdFeB magnet offers fantastic performance, which make it the best choice for several technological uses. NdFeB magnet provides very particular efficiencies when trying to convert electric energy into kinetic energy, and vice versa. In the near future we will need to be extremely efficient with our energy uses if we want to win the war against climate change. However, with the growing demand from downstream industries, such as EV motor industry, we need a magnet that can perform at higher temperatures, which means that we need dysprosium and terbium. The world has plenty of sources for PrNd but less for the heavy rare earths dysprosium and terbium. Ionic clays are an excellent source for these elements, and these clays are rarely found outside of China and Myanmar. Having found ionic clays in Chile puts Aclara in a very good position to supply these very scarce elements.
Asian Metal: How do you predict the development of NdFeB magnet industry in the coming years?
Ramón: I foresee a bright future for NdFeB magnet in the coming 5 years. According to IEA, the EV industry will witness a yearly compound average growth rate of 31% from 2022 to 2030, which means that the demand from EV industry for PrNd magnet will double every two and half years. The International Renewable Energy Agency (IRENA) predicts that wind power generation industry, especially off-shore, will take off in a very rapid way and is expected to grow at an annual compound average growth rate of 12% from 2022 to 2030. In this case, demand from wind power generation industry for PrNd magnet will double every six years.
Asian Metal: What do you see as the most import downstream applications of NdFeB magnet at present? Which downstream applications are expected to drive NdFeB magnet industry in the coming years?
Ramón: Electric vehicle industry plays as the leading role in the downstream industries and its' prospect will be very promising as long as a stable supply of PrNd, dysprosium and terbium is guaranteed for high performance EV motor production. Automobile manufacturers have successively set optimistic short-term and long-term targets. For example, Tesla aims at an production capacity of 1.4million EVs by 2022; Volvo targets at 100% sales from EVs by 2030. In addition, large countries have set ambitious goals. For instance, China aims at exclusive sales of EVs and HEVs by 2035, when UK will forbid sales of non-electric vehicles。 Therefore, companies like Aclara are needed to consistently supply the dysprosium and terbium in order to make these new technologies viable. I belive that there are also many downstream applications with great potentials, such as drones, which are mostly regarded as toys today, will be soon adopted for transportation of goods and people. Such transformation requres a very efficient EV motor, which is produced of rare earth products, to convey the weight of battery, loads, etc.

Asian Metal: China's sales of electric vehicles in 2021 reached around 3.52 million, with a sharp increase of around 1.6 times YoY. How about the electric vehicles sales in South America in 2021?
Ramón: Electric vehicle sales are increasingly rapidly all over the world but not in South America because the local markets continue to be heavily dependent on internal combustion vehicles. This is not because people prefer them, but because the electric vehicles is not available in South American countries yet. Car dealers have not started the EV supply due to the shortfalls in the supply chains, especially the supply chain of battery. Chile is the leading country in South America to develop EV industry. In January, 2022, Chile announced the National Electromobility Strategy, where the country set a target of zero emission from public transport vehicles by 2035. Santiago is already home to one of the largest electric urban bus fleets outside of China, with more than 800 electric buses on the road.
Asian Metal: What’s your prediction of global electric vehicles industry development prospect in the coming five years?
Ramón: I’m not a specialist on the EV sector, but I see that many countries are pushing their markets to ensure that by 2030 and 2035 either all or most of the vehicles are electric-driven. Major automobile manufacturers have also made significant commitments to EV development. So I strongly believe that EV will lead the vehicle market globally. However, I believe that there is a big constraint in the materials needed to make technological changes happen. We need enormous amounts of copper, lithium, cobalt, nickel and rare earths for EV development. We foresee dysprosium and terbium supply shortages occurring in the second half of this decade, a serious problem which seems difficult to overcome with the known heavy rare earth projects. At Aclara we are committed to become part of the solution for such scarcity, but for us it is important to find out how we accomplish that goal. It makes no sense to solve that problem by creating another, production of rare earths needs to be clean and sustainable, there is no other way.
Asian Metal: Thanks for your excellent sharing! Wish you every success in your business.
Ramón: Thank you very much for the opportunity to share our story. We are very excited with the high quality of our project, both in terms of natural resource and process design, and expect to be an important player in making the electric revolution happen. We all need to act with a sense of urgency in order to address climate change in a timely manner.