25th August 2021
Rare earth elements (REEs) are having something of a moment in Europe over the last week or so. This comes from two main directions: firstly, the EU’s proposals to invest in domestic production of rare earth permanent magnets, required for electric vehicles and wind turbines, and secondly from the furore over Greenland Minerals’s (ASX:GGG) attempt to build a globally significant REE mine in Greenland.
On the first issue, this is an attempt to replicate the success of Europe’s moves over the last several years to create an electric vehicle (EV) battery sector on its shores. Worried by the competing needs to move towards greener technology and reduce its dependence on Chinese products, especially during the tumultuous Trump era when the west’s relationship with China was sometimes on shaky ground, the EU offered funding and administrative assistance to get the EV battery sector off the ground. To date, this effort has attracted €40 billion of planned investment in 38 so-called “gigafactories” around the continent, so all in all you’d have to say it was a success.
Now, the EU hopes to repeat that achievement with the REE magnets that are also an essential component of EVs. This project comes in response to the fact that 90% of these magnets are currently made in China, with only one German company (Vacuumschmelze) producing specialised products in the EU, and no current producers in the USA. Should the Chinese supply dry up for any reason, electric vehicles and wind turbines will become impossible to build, stymieing efforts to improve greenhouse gas emissions. But European producers have to compete with a Chinese sector that doesn’t just enjoy lower labour and production costs, but is also strongly supported by the government. Subsidies and tax rebates reduce the cost of raw materials for Chinese producers by 20-25%, a nightmare scenario for higher-cost European competitors.
The European Raw Materials Alliance (ERMA) is working to combat that gap. Suggestions from potential EU producers include compensating for the disparate cost of raw materials, or imposing an import penalty on Chinese products (good luck getting that one past the World Trade Organization). ERMA’s REE recommendations are due to be made public in September, and there is apparently an action plan being passed around the bigwigs in the EU. Thierry Breton, the EU Commissioner for Internal Market, told a conference in June that the EU wants to supply 60% of its own magnets for wind turbines by 2030, so that gives you some idea of how fast they are hoping to move. The current plan apparently considers both cheap finance and materials subsidies as viable options to encourage development of the sector.
As positive as these moves are, they will ultimately be fruitless if the EU and other western powers can’t find a strong supply of raw REE materials outside China, since China is still the source of most of those. Figures vary on what percentage of REEs China produces; in my Friday newsletter about resources in Afghanistan I cited a figure of 70% of global supply, but when Trump signed an executive order encouraging rapid REE mine development in the US, the figure was quoted as 80%. Either way, without Chinese supply the market would grind to a halt. Developing new sources of REEs is therefore of critical strategic interest to the west, and one project that could have a global impact is the Kvanefjeld REE and uranium site in Greenland. But its operator, Australian company Greenland Minerals, is running into roadblocks with the community.
Greenland is owned by Denmark (remember when Trump wanted to buy it off them? Well, that wasn't unrelated) but is semi-autonomous, and has its own government which is currently controlled by a coalition between two Inuit parties: Ataqatigiit and Naleraq. These two came to power in a snap election caused by the collapse of the Siumut-led coalition in February, which was directly sparked by disagreements over Kvanefjeld. On the one hand, the project, which is estimated to be the second largest REE deposit in the world, would bring an avalanche of jobs and money to a region where the population has dwindled by 25% since 1991, not to mention the global strategic impact of such a bountiful source of REEs in the west. On the other hand, local indigenous communities are very worried about the potential for radioactive contamination because of the deposit’s uranium enrichment. Furthermore, there is some question over Greenland Minerals’s independence from China, given that around 9.4% of the company is held by Shenghe Resources, which in turn has its largest shareholder as an institute linked to the Chinese government. Greenland Minerals says that this relationship brings Chinese expertise in rare earth extraction and processing to the company, skills which are lacking in the west, but this as well as the potential environmental impact of Kvanefjeld has caused major disquiet in Greenland, to the point where Greenland Minerals has refused to participate in this month’s community consultations out of fear for the safety of its staff.
REEs and the technology that depends on them are already a hot-button global issue, and as the green, military and consumer technology that requires them begins to permeate more and more of the world, bodies like the EU will have to become innovative in finding ways to secure both the supply of raw materials and the technical know-how to process and use them.
Around the Traps
On the topic of REEs, Leading Edge Materials (TSXV:LEM) has filed the PEA report for its Norra Karr project in Sweden. This is an interesting deposit because it contains heavy REEs, which can be much more valuable than light REEs.
Mawson Gold (TSX:MAW, FRA:MXR, PK:MWSNF) has drill results out from its huge 2020/21 drill campaign on the Rajapalot gold project in Finland, where it has defined two new old-cobalt zones and will release a resource update soon. Check out their video on the larger project below, or at YouTube here!
Firefox Gold (TSXV:FFOX, OTCQB:FFOXF) has announced that it’s ramping up exploration to the mechanised stage at its Sarvi project, after geophysical, mapping and sampling work earlier this year. This marks the fourth drill-ready project for the company, according to President and CEO Carl Löfberg.
Rupert Resources (TSXV:RUP) has announced the expansion of its land package in central Lapland through a combination of an option agreement with Sakumpu Exploration and new exploration licenses. These gold projects bring Rupert’s total holdings in the Central Lapland Greenstone Belt to 595 km2.
That's it from Europe this month, have a good week folks!
- Jane Lockwood