Emerging Rare-Earths Market: U.S. and Brazil Step Up to Challenge China

The U.S. and Brazil are advancing rare-earth mining and processing to reduce reliance on China, which dominates the global supply chain. Aclara Resources in Canada is leading efforts to establish processing facilities in the U.S. and partner with companies like VAC. Brazil holds vast rare-earth reserves but faces regulatory challenges and higher mining costs. Investments in environmentally friendly practices could reshape the landscape of rare-earth sourcing globally.

In a notable shift, several nations, including the U.S. and Brazil, are ramping up efforts to develop rare-earth mining and refining capabilities, particularly to support industries like electric vehicle production and consumer electronics. Rare earths, which are crucial minerals in high demand globally, are increasingly being sourced outside of China, the dominant player in this market. Currently, China accounts for approximately 70% of global rare earth mining and a staggering 90% of processing, raising alarms among other nations eager to secure their supplies.

One company at the forefront of this effort is Aclara Resources from Canada. The firm is working to open a rare-earths mine and has plans for a processing facility in the U.S., with a decision expected by August regarding its location. Ramón Barúa, the CEO of Aclara, describes China as “a formidable competitor” and highlights the substantial agreements in place for the supply of rare earths, including a deal with VAC, a German company which is investing $94 million in South Carolina to manufacture magnets for major clients like General Motors.

The urgency in securing alternative rare-earth sources has grown, particularly as geopolitical tensions escalate. Following new U.S. tariffs on Chinese goods, China has strengthened its export controls on rare-earth materials, causing companies like Tesla to scramble for non-Chinese options. According to a recent comment from Tesla’s CEO, Elon Musk, “Hopefully, we’ll get a license to use the rare-earth magnets,” reflecting the heightened demand and concern for securing reliable resources.

Brazil stands out in this scenario, holding the second largest rare-earth reserves globally, estimated at around 21 million tons. This significant figure constitutes over a fifth of known reserves, dwarfing the U.S. reserves by more than tenfold. Notably, Brazil possesses a distinct advantage in heavier rare earths—dysprosium and terbium—vital for maintaining magnet strength at high temperatures, a key factor in electric vehicle performance. However, regulatory complexities and financing challenges have hampered Brazil’s position as a serious player in the rare-earth market, despite its vast reserves.

The cost of mining in Brazil is notably higher, estimated to be approximately three times that of China, presenting challenges for competitiveness. Only a handful of Western companies have successfully navigated the intricacies of rare-earth processing, underscoring the steep learning curve involved. As Alexandre Silveira, Brazil’s mines and energy minister, stated, “This potential presents a significant opportunity.”

Aclara’s development plans include a large processing plant near Nova Roma, which is expected to initiate production by 2028, with significant backing from Denham Capital. This facility will process rare earths partially, creating carbonates containing these elements for further refinement in the U.S. Despite the higher costs, Aclara promotes its environmentally friendly mining practices compared to traditional Chinese methodologies, which have raised considerable environmental concerns.

Brazil’s previous history with mining regulations faces scrutiny, especially after severe incidents like the deadly dam collapse in 2019. Yet Aclara’s approach is touted as being more conscious of environmental impacts. Unlike traditional methods, which pose numerous contamination risks, Aclara plans to excavate at shallower depths and process with reduced environmental impact, a stance welcomed by analysts.

In light of the situation, the U.S. government has invested significantly to rejuvenate its rare-earth processing capabilities and lessen dependency on foreign sources, declaring this a national priority under previous administrations. The European Union is also working to minimize its reliance on China, setting ambitious targets for local processing of critical materials, including rare-earths. As the global landscape shifts, companies like Aclara could be pivotal in reshaping the rare-earth supply chain.

The rise of rare-earth processing and mining outside China marks a critical shift in sourcing strategies for nations like the U.S. and Brazil. With Chile’s increasing geopolitical tensions and China dominating the supply chain, the strategies and developments undertaken by companies like Aclara present both a challenge and opportunity in revitalizing rare-earth mining sectors. Environmental concerns and regulatory frameworks will play an essential role as these countries attempt to forge a more resilient supply chain for vital technologies.

Original Source: www.hindustantimes.com