Wednesday 23rd September 2020

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Towards Canadian REE R&D

Industry calls on government to support a Canadian rare earths supply chain

by Greg Klein

Free markets supposedly work free of government meddling. But what capitalist would refer to free money, even from government, as “meddling”? Anyway, as a number of industry and academic spokespeople told a Canadian parliamentary committee, other governments do it. Canada lags far behind not only China, but also the U.S. and Australia, in funding research and development for a national rare earths industry.

Industry calls on government to support a Canadian rare earths supply chain

That was among the salient points of a 30-page summary of evidence that the House of Commons Standing Committee on Natural Resources released earlier this month. The challenge, of course, is to develop Canadian expertise that can diminish some of China’s near-monopoly on supply, demand and the various stages of processing commonly considered inscrutable to non-Chinese.

With light and heavy rare earths considered critical minerals for their economic importance and supply risk, the urgency becomes greater. All the more so because China’s “costs of producing ‘cheap’ rare earths are becoming increasingly unsustainable in terms of the environment, the availability of reserves, the health of its communities and the political ramifications,” according to a Secutor Capital Management report about Commerce Resources’ (TSXV:CCE) Ashram deposit in Quebec.

Other governments are putting up money. The U.S. has invested nearly $120 million to REE R&D over five years, the inquiry heard. Australia has committed $80 million over three years. But during a three-year period ending in March, Canada doled out a mere $1 million.

Canadian industry, on the other hand, matched every federal dollar given to Natural Resources Canada’s CanmetMINING research agency with $5 of its own. Most of it went to R&D.

“Canada is in a race with Australia, the U.S. and others to develop an industry,” Avalon Rare Metals TSX:AVL VP of sales and marketing Pierre Neatby told the committee. “Canada’s opportunity is now.”

There are other contenders too. Urging the feds on, Matamec Explorations TSXV:MAT president/CEO Andre Gauthier said, “Other countries, such as Brazil and Vietnam, are planning the development of their own rare earths industry and they are making it a priority.”

The inquiry also heard that Korea, Japan, the UK, Belgium, Germany and the EU “have created institutions and research programs that aim at diversifying the existing rare earth supply sources, recycling existing products and developing substitute materials to minimize the use of rare earth metals.”

According to Pele Mountain Resources TSXV:GEM president Al Shefsky, Canada “can lead and win, but [it] must act decisively…. If Canada does not adopt a national strategy, it will lose an extraordinary opportunity for economic growth and employment to foreign competitors who are investing heavily to seize this opportunity.”

A national rare earth supply chain “is essential to Canada’s strategic and economic security,” he added. “With world-class deposits of its own, Canada is in a unique position not only to produce rare earths, but to create its own rare earth supply chain, thereby creating billions of dollars of economic activity along with thousands of high-paying jobs.”

That potential comes from Canada’s deposits, roughly 40% to 50% of the world’s known rare earths resources, witnesses told the inquiry. Another advantage lies in Canada’s stability compared to countries like South Africa and Kyrgyzstan.

[The Canadian Rare Earth Elements Research Network wants to] establish a Canadian-based rare earths production and secure 20% of critical REE global supply by 2018.

But “no two REE deposits are the same,” pointed out representatives of the Canadian Rare Earth Elements Research Network. “Each deposit requires unique, costly and innovative engineering on front-end processing.”

Yet CREEN’s ambition expresses considerable optimism. The organization wants to “establish a Canadian-based rare earths production and secure 20% of critical REE global supply by 2018,” the committee stated. “CREEN is comprised of mining companies, academia, government, research centres, consulting firms and other organizations that are working together to develop innovative solutions to the various challenges faced by this sector.” By press time CREEN chairperson Ian London had not responded to a interview request. (Update: Read an interview with Ian London here.)

What becomes of the committee’s work isn’t clear. A House of Commons committees directorate clerk tells, “There’s no recommendations to the government in the summary evidence and no request to the government to answer back.”

Download the committee’s 30-page summary.

Read more about China’s control of the rare earths supply chain.

Disclaimer: Commerce Resources Corp is a client of OnPage Media Corp, the publisher of The principals of OnPage Media may hold shares in Commerce Resources.

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