Rare Earths: Canada Rare Earth Corp. receives support for rare earth refinery purchase

Rare earth refinery

Canada Rare Earth Corp. (CREC) signed an agreement with an unnamed third party company to support their planned purchase of 60% ownership in a rare earths refinery, located in South East Asia. The unnamed third party has provided CREC with a non-refundable US$0.5M payment, which would cover CRECs financial requirements to complete the rare earth refinery purchase. In exchange, the third party has an option to purchase a 50% stake in the refinery, which would allow CREC to retain a 10% stake. CREC would also retain rights to supply 100% of rare earth concentrates to the refinery and market 100% of rare earth products produced at the refinery.

Roskill view: A number of companies have targeted an independent centralised rare earth refining facility since 2012, though declining rare earth prices and a lack of financial support in the industry has seen little progress achieved. Though permits for the refinery are yet to be finalised, the payment does give CREC financial support whilst it looks to secure the final operating permits. The investment in CREC also follows a US$1.5M loan facility signed with Talaxis in February 2018.

A centralised rare earths processing facility outside China could open up a number of opportunities for rare earth projects under development. Removing the investment and metallurgical know-how required to build, commission and operate a rare earth separation facility would significantly de-risk the development of many rare earth operations, though the price paid for mixed rare earth concentrates and compounds would need to provide a suitable margin to support both miner and processor. Processing concentrate and compounds from multiple sources also raises concerns with recovery and impurity control, which would need to be addressed and may limit raw material sources. Despite the potential set-backs, further non-Chinese rare earth separation capacity would be welcome to the rare earths industry which remains dominated by Chinese production.