Aclara closes in on new rare earth supply chain outside China

Aclara Resources (TSX: ARA) has inaugurated its rare earths separation pilot plant in Virginia, marking the start of one of the few integrated supply chains for the metals outside of China.

The now-commissioned facility is to validate Aclara’s proprietary rare earth separation technology and support the development of the company’s commercial-scale separation plant in Louisiana, according to a statement issued Thursday.

The Virginia Tech plant at Blacksburg is expected to produce its first separated light rare earth oxides in May and heavy rare earth oxides in August, mined from Aclara’s ionic clay sites in Brazil and Chile.

“Demonstrating that Aclara possesses the technology to separate rare earths – including Chinese-restricted heavy rare earths – in the United States represents a major milestone,” Aclara Chairman Eduardo Hochschild said in the release.

“This achievement is especially significant because Aclara has the heavy rare earth ionic clay deposits needed to supply the process, delivering a sustainable and reliable source of these critical materials to the Western Hemisphere.”

Western catch-up push

Once operational, the pilot and Louisiana plants would position Aclara among a small handful of Western companies with rare earth separation capabilities, a key technological bottleneck where the West is still playing catch-up to China.

Energy Fuels (TSX: EFR; NYSE: UUUU) and MP Materials (NYSE: MP) in the United States and Lynas Rare Earths (ASX: LYC) in Australia and Malaysia are the core Western producers outside of China that can separate rare earths at scale. Aclara’s facility in Port of Vinton, Louisiana, is due for completion in 2027.

The Virginia milestone adds to wider momentum for rare earths in North America, with the US International Development Finance Corporation (DFC) in February investing $565 million in Serra Verde, which operates the Pela Ema site in Brazil, Latin America’s sole rare earths miner. Apple and the US government last year also invested in MP Materials.

Despite Aclara’s announcement, its shares fell almost 15% to C$2.74 apiece in Toronto on Thursday morning in Toronto, amid a broader stock-market selloff caused by the war in the Middle East. Aclara has a market capitalization of C$653.4 million ($476 million).

$50M for development

The announcement comes as Aclara closed on Thursday a $50 million private placement, whose proceeds it plans to spend on developing projects such as Carina.

Blacksburg will produce the separated light rare earths neodymium and praseodymium (NdPr) and heavy rare earths dysprosium and terbium. A team of Virginia Tech researchers are working on optimization and advanced analysis at the plant, located about 300 km southeast of state capital Richmond.

Brazilian anchor asset

The main feedstock for the Virginia and Louisiana plants will come from Aclara’s Carina deposit in Brazil’s Goiás state. The open-pit project could produce 149 tonnes dysprosium, 25 tonnes terbium and 1,170 tonnes of NdPr annually over an 18-year life, according to a prefeasibility study from November.

Carina has a post-tax net present value (at an 8% discount rate) of $1.07 billion and an internal rate of return (IRR) of 21.8%. Initial capital costs of $548.3 million could be repaid in 4.5 years.

The DFC has pledged up to $5 million in development funding for that study.

Aclara submitted its environmental impact assessment for Carina last May and plans to complete a feasibility study in the second quarter of 2026. Early works could start at the site by mid-2026, with operations starting in mid-2028.

The Vancouver-based company is also developing the Penco Module project in Chile. Penco is estimated to produce about 774 tonnes of rare earth oxides (REO) annually over 14 years, according to a preliminary economic assessment from 2021.

At a base case price of $96 per kg of REO, Penco has an after-tax NPV (at a 5% discount rate) of $178 million and an IRR of 23%. Initial capital of $119 million could be repaid post-tax in 4.7 years.

Aclara’s major shareholders include Eduardo Hochschild, with 37%; Hochschild Mining (LSE: HOC), with 20%; and CAP S.A., with 10%.