USA Rare Earth’s ambitious plans for domestic supply chain

Round Top rare earths project is located outside El Paso, Texas. Image from USA Rare Earth.

A lesson to be learned from the US-China trade war and coronavirus-induced lockdowns wreaking havoc on markets and hitting mining production outlooks hard – is that North America needs to establish more robust domestic supply chains.

The US responded to the covid-19 crisis by shutting its borders and companies responded by limiting production, as operations at mines worldwide ground to a halt.

Shutdowns to manufacturing plants in China that could potentially cut off US rare earths imports shone a spotlight on the fact the nation is reliant on China for its rare earths needs.

The US government has stepped up efforts to ensure the supply of critical minerals from outside China. As part of those initiatives, it recently signed a memorandum of understanding with Greenland to conduct a hyper-spectral survey to map the country’s geology.

The $14 billion-a-year rare earth magnet market is more than 60% controlled by China which, under Made in China 2025, is increasingly using rare earth magnets in finished and semi-finished products, as opposed to exporting the magnets

Demand for rare earth magnets is being driven mainly by electric vehicles, wind generators, medical devices, smart phones, and aerospace and defense applications.

The $14 billion-a-year rare earth magnet market is more than 60% controlled by China which, under Made in China 2025, is increasingly using rare earth magnets in finished and semi-finished products, as opposed to exporting the magnets, says USA Rare Earth, the funding and development partner of the Round Top heavy rare earth and critical minerals project in West Texas, and industry sources estimate the rare earth magnet market will nearly double by 2027.

USA Rare Earth is also purchasing the equipment necessary to build the only rare earth magnet production facility in the Americas.

The only active rare earths mine in the US is Mountain Pass in California. After a mothball period, it is back in production – but is now owned by MP Materials, which almost a tenth-owned by a Chinese investor.

When the US Geological Survey does its annual report on mineral production – the US is technically producing zero rare earth oxides because what is coming out of Mountain Pass is being shipped to China, Dan McGroarty, USA Rare Earth advisory board member, told MINING.COM.

Building a critical minerals stockpile

McGroarty said in 2014, the Obama administration designated two rare earths, terbium and dysprosium, to be on the rare earths list for acquisition into the National Defense stockpile.

“That was at a point where there was no terbium and dysprosium production in the US. Those are the two largest, by volume, rare earths that we have at Round Top. In that respect, there’s a very strong alignment,” McGroarty said. 

“The decision that the President made last summer, under the Defense Production Act (DPA)…to designate the entire supply chain for rare earths as ‘essential to the national defense’ under the DPA, that’s what allows the funding in the rare earths space – and there is more coming,” he said. 

“We’ve got a very unique deposit in a number of respects – we have 16 of the 17 rare earths, with many in the rare earths categories that speak to a number of defense applications, and manufacturing. It is probably the largest heavy rare earths deposit in the world outside of China,” Pini Althaus, CEO of USA Rare Earth said.

Pini Althaus, CEO, USA Rare Earth.

“We also have a significant amount of lithium, we will be the 2nd largest US producer by 2023, so we have a very diversified project… with major infrastructure in place.”

USA Rare Earth envisions a 130 year plus mine life on the project, but the PEA economics is focused on the first 20 years.

Althaus said they are able to heap leach the deposit, which is rare for most rare earths deposits.

“Between our capex and opex being low – we are able to compete with China on pricing,” Althaus said.

USA Rare Earth announced in December 2019 they are opening a pilot plant facility in Wheat Ridge, Colorado for the purpose of fully separating and purifying rare earth and other tech metals and critical minerals, leached from ore from the Round Top project.

The Colorado pilot plant will be the first processing facility outside of China with the ability to separate the full range of rare earths – lights, mids and heavies. 

Althaus said the plant will be moved to Texas, where they will begin mine construction.

The Wheat Ridge plant is the second piece of a 100% US-based rare earths oxide supply chain, drawing on feedstock from Round Top.

Construction on the Colorado facility is complete, and is slated to open in the next week, Althaus said.

Early in April, the company announced that that it has purchased the neodymium iron boron (NdFeB) permanent magnet manufacturing equipment formerly owned and operated in North Carolina by Hitachi Metals America.

Round Top has been part of a Department of Defense grant, as the DOD picks the rare earths it wants processed and purified

USA Rare Earth will warehouse the equipment pending a decision about where to locate the new magnet operation, with the priority being good access to the Round Top project.

The US Military is among possible investors – and Round Top is part of the solicitations.

There have been two solicitations that have come out of the Department of Defense (DOD). The first closed late 2019 around processing and is waiting on a response. On March 2, there was another solicitation around light rare earths.

Round Top has been part of a DOD grant, as the DOD picks the rare earths it wants processed and purified.

USA Rare Earth announced in March the appointment of retired Army General Paul J. Kern to its board of directors.

General Kern is a member of the Defense Science Board, established by federal law in 1956 to provide independent advice and recommendations on scientific, technical, manufacturing, acquisitions process and policies, and other matters of interest to the Department of Defense. 

USA Rare Earth aims to have Round Top in production within 30 months, but McGroarty said if they can expedite the timeline – they will.

“There will be a significant impact on the economy. We’re talking about a $500 billion to $1 trillion impact, in [terms of] job creation and manufacturing…everything to the electric vehicle sector,” said Althaus. 

“From a practical standpoint, one of the reasons a lot of companies have gone offshore, labour costs aside, is the raw materials and processing capabilities are in China,” Althaus said.  “It’s a national security issue, its an economic issue, a manufacturing issue, its job creation, and the US … is trying to bring that back home.”