REE tariff puts wind in Alaska SMC sails
Ucore said China levy is bullish for planned Alaska REE facility
Last updated 8/14/2018 at 9:04am
The Trump Administration's latest round of tariffs on Chinese goods includes a 10 percent levy on rare earth elements, a group of 17 elements on the periodic table with unique properties that make them key ingredients in a wide array of modern high-tech products such as terabyte hard-drives that fit in the palm of your hand, high-efficiency green-power generation and sophisticated military hardware.
For decades, China has dominated the REE market and has largely controlled the price of these critical elements.
"China has been the leading producer of REEs for decades and since the late 1990s it has accounted for more than 90 percent of global production, on average," the USGS wrote in its January report on minerals critical to the United States.
With this monopoly, China has been able to control the prices and supply of the individual rare earths.
When China restricted its exports of rare earth in 2010, the prices of these elements skyrocketed and sent high-tech manufacturers and mining companies scrambling for non-Sino sources. It was not long, however, before the Middle Kingdom was once again supplying the world with low-cost REE, driving down economics of developing mines elsewhere in the world.
To help level the playing field, the Trump Administration is levying a 10 percent incremental tariff on all rare earths, including yttrium and scandium, and associated alloys the U.S. purchases from China.
Ucore Rare Metals Inc., which is currently working toward developing a recovery plant in Southeast Alaska that would extract and separate rare earths from non-Chinese sources, hailed the move as a positive step toward establishing an REE supply chain the United States, including an Alaska-based rare earth separation facility the company has on the drawing board.
"We're optimistic that this positive move will trigger a re-baselining of more globally appropriate and realistic pricing for rare earths and other minerals in the U.S. critical metals sector," said Ucore President and CEO Jim McKenzie. "For decades, China has subsidized REE production in an effort to undervalue manufacturing input materials, artificially suppressing prices in order to incentivize downstream production in China, thereby maximizing American dependence on China as the primary source of rare earths. This has cost the U.S. jobs, innovation, and national security."
Late in 2017, President Donald Trump issued an executive order that calls on federal agencies to devise a strategy to ensure America has reliable supply of minerals deemed critical to the nation, including rare earths.
"It shall be the policy of the federal government to reduce the nation's vulnerability to disruptions in the supply of critical minerals, which constitutes a strategic vulnerability for the security and prosperity of the United States," reads the executive order signed by Trump on Dec. 20.
The executive order called upon the United States Geological Survey, in consultation with the Pentagon, to identify and publish a list of minerals critical to America.
In May, the USGS published a list of 35 minerals, metals and groups of elements considered critical. This list ranges from widely known metals such as aluminum and tin, to the more exotic elements like indium, niobium and rare earth elements.
Within six months of establishing the critical minerals lists Trump wants a report that includes:
• a strategy to reduce the nation's reliance on critical minerals;
• an assessment of progress toward developing critical minerals recycling and reprocessing technologies, and technological alternatives to critical minerals;
• options for accessing and developing critical minerals through investment and trade with our allies and partners;
• a plan to improve the topographic, geologic, and geophysical mapping of the United States and make the resulting data and metadata electronically accessible to support private sector mineral exploration of critical minerals; and
• recommendations to streamline permitting and review processes related to developing leases with the goal of enhancing the access, discovery, production and refining of critical minerals in the United States.
Any critical minerals strategies resulting from this plan are expected to work together with the rare earth tariffs to bolster U.S. production of these high-tech elements.
"The recent directives from Washington, fostering a reliable and cost-competitive REE supply chain on U.S. soil, speaks volumes to the need for a secure, safe, and environmentally sound domestic rare earth supply," said Ucore COO Mike Schrider.
At the same time, the U.S. House of Representatives' version of the 2019 National Defense Authorization Act directs the Pentagon to purchase, to the maximum extent possible, rare earth permanent magnets, and certain tungsten, tantalum and molybdenum products, from sources other than China, Russia, Iran, and North Korea.
A May 22 policy letter from President Trump's Office of Management and Budget says the "Administration strongly supports section 873."
"The global markets for rare earths and tungsten are currently dominated by China, which has pursued an aggressive strategy to control the supply of these critical materials, resulting in the loss of American jobs and technology," Office of Management penned in the letter to the House Rules Committee. "This section demonstrates that the United States will seek alternate sources of supply when foreign nations seek to unfairly disrupt a marketplace in pursuit of economic and military advantages at variance with the strategic interests of the United States."
Last July, President Trump signed an executive order that calls for the Secretary of Defense and other Administration leaders to investigate the defense industrial base and supply chains. This assessment is to culminate in a report expected to land on the President's desk soon.
Ellen Lord, Pentagon's undersecretary for acquisition and sustainment, said results from her team's assessment of the United States' reliance of foreign sources for minerals critical to the military is "quite alarming."
She said the United States has "an amazing amount of dependency on China" as its "sole source for rare earth minerals."
Bullish indicator for SMC
Ucore Rare Metals believes the Trump Administration's tariffs and other initiatives to identify and rectify America's dependence on China for rare earths puts wind in the sails of its first "Strategic Metals Complex," an REE separation facility the company plans to build near Ketchikan in Southeast Alaska.
"The Trump Administration understands that ending rare earth market manipulation, by forcing more realistic REE pricing, will escalate a revival in American REE manufacturing while restoring market balance," said Ucore CEO McKenzie. "The tariff program is a very bullish indicator for Ucore as we execute plans to build a self-sustaining REE manufacturing Strategic Metals Complex (SMC) in Alaska, and with sizeable prospective sources of feedstock in both Alaska and Kentucky."
SMC aims to extract individual rare earths from non-Chinese feedstocks, including from conventional REE sources in the U.S., such as Ucore's Bokan Mountain project, and non-traditional sources such as by-products from coal operations.
"The Ucore SMC, currently undergoing engineering design for construction in Ketchikan, Alaska, is a remarkable solution to the U.S. REE supply problem," said Schrider.
This facility will utilize molecular recognition technology, an innovative process developed by Utah-based IBC Advanced Technologies.
The basic idea behind this process, known as MRT, is that resins are engineered to grab ions based on various traits such as size, chemistry and geometry. Loaded into columns, these resins latch onto the targeted material suspended in a solution that is pumped through the column. Simply rinsing the resin with a mildly acidic solution releases a nearly pure version of the material the resin is engineered to bind to.
This technology has the advantages of being more cost effective and environmentally sound than traditional extraction methods that use various chemicals to break apart rare earths, which are notorious for being tightly bound to each other.
Using a solution derived from Ucore's Bokan Mountain project, a rare earth mining project about 35 miles southwest of Ketchikan on Prince of Wales Island, IBC and Ucore have designed resins that REEs will latch onto and have proven this technology works for the separation of individual rare earths with a pilot plant known as SuperLig-One.
The company is now looking to scale this technology up to commercial capacity.
During a recent trip to Washington D.C., Ucore met with senior Trump Administration and Congressional officials and shared its vision of SMC as a way to reduce American dependence on the Chinese supply of rare earths.
"As an industry leader in heavy REE supply and separation, Ucore stands at the ready to help end this dependency," said McKenzie.