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Editorial Coverage: Indispensable for production of cell
phones, wind turbines and electric vehicles, rare earth elements
("REEs") have rocketed in importance as demand for electronics and
EVs continue to surge. In addition, rare earths play an essential
role in national security and commercial applications. For cell
phones to vibrate or EV motors to provide power, they need powerful
magnets, and REEs are critical to the manufacture of these powerful
permanent magnets. However, serious supply chain concerns have
arisen with REEs, because China has a stranglehold on global
supply. This is of particular concern due to the need for REEs by
the military. The typical F-35 fighter contains nearly 1,000 pounds
of rare earths. The United States used to be a large producer of
REEs, but Chinese REE producers gradually drove U.S. mines out of
business; China now controls more than 80% of world production and
dominates nearly every stage of the global REE supply chain.
Reliance on China jeopardizes U.S. national security, and growing
demand has EV makers on edge. Initiatives are underway to rectify
the imbalance, and Energy Fuels Inc. (NYSE American: UUUU)
(TSX: EFR) (Profile) is leading
the effort to tilt the balance back to American shores. UUUU just
announced a new rare earth
production initiative spanning European and North American
critical material supply chains. Already the country’s largest
producer of uranium and a leading producer of vanadium (both
designated as critical minerals), Energy Fuels has all the
necessary technical know-how, licenses, production facilities,
production capacity and resources to bring REEs production back to
the United States. And this is all happening in 2021, while other
initiatives are years away. Energy Fuels’ initiative will produce
value-added rare earth products from natural monazite sands, a
low-cost byproduct of heavy mineral sand operations that mainly
produce zircon and titanium. There are heavy mineral sand
operations in the United States, Australia, Africa and elsewhere,
and they are all selling their monazite sands into China’s rare
earth industry. This new non-Chinese supply chain can’t happen soon
enough for automakers, which are rapidly turning to all-electric
vehicle production. The world’s most recognized EV company,
Tesla
Inc. (NASDAQ: TSLA), has shifted to a magnetic motor
using neodymium in its Model 3 Long Range car, which adds to
pressure on already strained supplies of a rare earth metals.
General
Motors Company (NYSE: GM) plans to end production of
its fossil-fuel-powered vehicles and exclusively offer electric
vehicles by 2035. Ford (NYSE: F) has
pledged that all its cars sold in Europe will be electric by 2030
and is adding more EVs to its U.S. lineup. On a similar
electric-powered path, Honda
Motor Company Ltd. (NYSE: HMC) intends to electrify
two-thirds of global automobile unit sales in 2030 and is planning
a global electric vehicle platform for larger EVs across select
global markets. These automakers represent just the tip of the
iceberg for the coming demand for REEs.
- Rare earth elements ("REEs") are crucial for production of
clean energy, electric vehicles, consumer electronics, national
defense and more.
- China controls more than 80% of global production and supply,
putting supply chains and national security at risk.
- S.-based Energy Fuels has established a new, integrated rare
earth supply chain and aims to meet 50% of U.S. demand for
REEs.
Click here to view
the custom infographic of the Energy Fuels
editorial.
Rarity of Non-Chinese Rare Earth Elements
While rare earths are not actually rare in the Earth’s crust,
rare earth supply chains not dominated by China are extremely rare.
The global rare earth magnet market reached $14.4
billion last year and is expected to see a huge uptick in
demand. Several rare earth elements, such as neodymium and
dysprosium, are critical to the motors used in electric vehicles.
Beyond EVs, the demand for REEs is booming across multiple sectors.
Rare earths are instrumental components in a myriad of high-tech
devices such as smartphones, cameras, computer hard disks,
fluorescent and LED lights, batteries, flat screen TVs, computer
monitors and more. Large quantities of some REEs are also crucial
for defense technologies and clean energy.
Demand for REEs is currently outstripping supply by about 3,000
tons per year according to Julie Klinger, the author of “Rare Earth
Frontiers.” Demand is likely to accelerate further and strain
access since the EV market alone is projected to increase nearly
tenfold over the next ten years. Exacerbating the situation,
the prices of all major Chinese-sourced rare earths have recently
spiked, especially those used in permanent magnets.
Prices for neodymium and praseodymium oxide (NdPr), which are
the most common rare earths used in making magnets, are up by more
than 40% in 2021. Several other key rare earths also jumped in
value this year, including dysprosium (+53%), gadolinium (+39%) and
terbium (+39%). This follows significant increases in prices for
these products in 2020. BMO Capital
Markets says that the surge in the price of rare earth metals
last year reflected geopolitical tensions in a tug of war between
China and the developed world.
Bringing It Home
Energy
Fuels Inc. (NYSE American: UUUU) (TSX: EFR) is
attempting to break this cycle of dependence on foreign sources and
bring REE production home to the United States. Already a leading
U.S. uranium and vanadium producer, the company announced on March
1, 2021, that a new fully
integrated, non-Chinese rare earth supply chain has been
created by Energy Fuels and Neo Performance Materials (NEO.TO).
Late last year, Energy Fuels strategically secured a supply of
natural monazite ore, mined in the Southeast by The Chemours
Company. Energy Fuels will process the natural monazite sands into
a mixed rare earth carbonate at its White Mesa Mill in Utah in the
next couple months. This is a product ready for the next stage of
rare earth production: separation. Monazite is one of the
highest-value, rare, earth-bearing minerals in the world, comprised
of 50% to 60% of total rare earth oxides, of which 22% to 24% is
neodymium-praseodymium oxide, an REE that is vital to producing the
powerful permanent magnets used in multiple applications, including
EVs, wind turbines, electronics and more.
Energy Fuels is initially processing 2,500 tons of monazite
(roughly 8% of current U.S. REE demand) but aims to meet 50% of
total current U.S. demand by processing 15,000 tons of monazite per
year. Processing that much monazite would represent only about 2%
of the company’s White Mesa Mill's existing throughput capacity and
less than 1% of its existing tailings capacity. Energy Fuels is
also actively looking to secure additional quantities of monazite
ores, and significant quantities are available around the world as
a byproduct of zircon and titanium production. Sources are readily
available from heavy mineral sand operations in the United States,
Australia, India, South Africa and other nations. This puts Energy
Fuels in an enviable position, especially as both demand and prices
for rare earths continue to surge.
As part of the announcement, Energy Fuels will produce a product
called a "mixed rare earth carbonate" and ship a portion of that
production to Neo Performance Materials’ rare earth separations
facility in Estonia, which is a NATO member and US ally. Energy
Fuels will sell the mixed rare earth carbonate to Neo, which will
then produce separated rare earth oxides and other value-added rare
earth products for European and U.S. markets.
Expertise Matters
Energy Fuels is in a unique position because it is already an
experienced U.S.-based uranium mining company, supplying U3O8 to
major nuclear utilities. Because of this expertise, the company can
process natural monazites derived from heavy mineral sands, usually
sold to China because they contain small amounts of naturally
occurring radioactive elements. Upon successful ramp-up, this will
become a new non-Chinese REE supply chain, one of only two in the
world today. While Energy Fuels does not seek to supplant China,
the pieces are falling into place for the company to potentially
become the lowest-cost, non-Chinese supplier of REE products.
This new agreement to produce and deliver mixed rare earth
carbonate also provides a tactical bridge for Energy Fuels,
allowing the company to develop further separation and value-added
rare earth capabilities at its White Mesa Mill in Utah over the
next couple years while ramping production. Energy Fuels is
currently evaluating this opportunity. If successful, Energy Fuels
will have developed a fully integrated U.S. rare earth supply chain
that can supply both the United States and global markets; Energy
Fuels may well be the first U.S. company to achieve this.
Speaking to the import of this new rare earth supply chain, Mark
S. Chalmers, president and CEO of Energy Fuels stated: "Together,
Energy Fuels, Neo and Chemours have successfully created an
integrated rare earth supply chain based in the U.S. and Europe.
Monazite is coveted globally as one of the highest-value rare earth
minerals in the world, due to its excellent distribution of
neodymium and praseodymium (NdPr), as well as 'heavy' rare earths.
It is already mined here in the U.S. and elsewhere around the
world. However, until now, there has been no integrated ability to
process monazite in the U.S. or Europe into the rare earth
materials needed to supply the rapidly increasing demand for
electric vehicles, renewable energy systems, and other clean energy
and advanced technologies. . . . We plan to supply all or a portion
of our mixed rare earth carbonate to Neo for several years, while
also developing our own separation, metals, alloys, and other
downstream rare earth capabilities at the White Mesa Mill for
supply into the U.S. as domestic markets grow.”
Creating a new supply chain for scarce, high-demand resources
heralds a bright future for the company, especially as companies
seek to diversify some of their supply chains away from China. Not
only is this initiative expected to begin production almost
immediately, but it also lays the groundwork for future growth and
expansion in a sector begging for solutions.
Reliant on Rare Earths
The auto industry is rapidly becoming completely electrified,
and it needs REEs to get there. Due to unique magnetic,
phosphorescent and catalytic properties, rare earths are the
elements that make possible everything from the miniaturization of
electronics to powering EVs.
Tesla
Inc. (NASDAQ: TSLA) engages in the design,
development, manufacture and sale of fully electric vehicles,
energy generation and storage systems. Tesla also provides vehicle
service centers, supercharger stations and self-driving capability.
The company shifted to a magnetic motor using neodymium in its
Model 3 Long Range car, adding pressure to already strained
supplies of a rare earth metals.
Founded in 1908, legacy automaker General Motors
Company (NYSE: GM) designs, manufactures and
sells cars, trucks and automobile parts. The major auto maker also
provides automotive financing services. GM plans to exclusively
offer electric vehicles by 2035 and end production of its
fossil-fuel-powered vehicles.
Ford (NYSE: F)
designs, manufactures, markets and services a range of Ford trucks,
cars, sport utility vehicles, electrified vehicles, and Lincoln
luxury vehicles worldwide. Ford has pledged that all its cars on
sale in Europe will be electric by 2030 and is adding more EVs to
its U.S. lineup.
Honda
Motor Company Ltd. (NYSE: HMC) engages in the
manufacture and sale of automobiles, motorcycles and power products
across the world. The company intends to electrify two-thirds of
global automobile unit sales by 2030.
As our economy becomes electrified, demand for REEs is expected
to continue unabated. By establishing its new integrated rare earth
supply chain, Energy Fuels aims to break the cycle of dependence on
foreign sources for these valuable commodities. The company’s
unique nuclear expertise allows Energy Fuels to process abundant
supplies of monazite sands despite the presence of natural
radioactive elements. Given the demand and the foreign chokehold,
Energy Fuels’ rare earth initiative may present a rare
opportunity.
For more information about Energy Fuels Inc., please visit
Energy Fuels
Inc. (NYSE American: UUUU) (TSX: EFR).
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