➤ Ionic Rare Earths is working to position its Makuutu project in Uganda as one of the few suppliers outside of China by 2025.
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Australia's Ionic Rare Earths Ltd. appointed Nitin Tyagi as a nonexecutive director in late June. The electric vehicle supply chain expert will look to optimize supply chain engagement, focusing on the US and European EV markets. Tyagi is also vice president of supply chain at Our Next Energy Inc., which focuses on battery technologies.
Ionic Rare Earths appointed Tyagi shortly after starting production of high purity, recycled magnet rare earth oxides (REO) at its UK plant. The company is also progressing the Makuutu heavy rare earths project in Uganda. Analysts expect the current $3 billion global market for REO magnets to expand to $15 billion by 2030, with a possible deficit resulting from significant demand growth in the EU, US and North Asia, according to Tim Harrison, managing director at Ionic.
S&P Global Commodity Insights and Tyagi discussed rare earth supply chains and Ionic's strategy of combining mining, refining and recycling operations. The following interview has been lightly edited for clarity and space.
S&P Global Commodity Insights:
Nitin Tyagi
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Core samples at Ionic Rare Earths' Makuutu project in Uganda, which could be on a short list of ex-China suppliers by 2025. |
As Makuutu obtains a mining license, it will be the only development-ready ionic adsorption clay with heavy rare earth products available for global markets, ex-China. By 2025, it will be on a very short list of ex-China suppliers.
Rare earths are used in permanent magnets, which are the preferred magnets in EVs because permanent magnet direct current motors are very efficient and provide power and torque in a very small form factor. This is very attractive for EVs as the motor efficiency, size and weight directly affect the vehicle range, which is a major customer-facing attribute of the EV.
Additionally, many OEMs have made climate pledges and are increasingly looking to increase recycling content in their products. Recycling of magnet REOs already makes up 40% of global magnet REO supply. Ionic's magnet recycling capacity offers entry into a circular economy for rare earths with an optimal European location for regional supply of materials for recycling.
You have been a battery supply chain director at Rivian Automotive Inc., and before that you were on Apple Inc.'s operations and supply chain team. What have you learned over that time about the intricacies about technology supply chains that require metals supply?
As a supply chain manager, I need security of supply and traceability for key strategic metals used in my products. The boom-bust cycle in pricing is bad for the overall supply chain. Very high prices force OEMs to look for alternatives, while the subsequent price crash makes newer projects uneconomical, thereby drying up the investment dollars needed to continue expansion of supply to keep up with the demand growth. This happened with price rallies in lithium from 2021-2023 and in cobalt from 2017-2018.
The best way to solve these challenges is to think in terms of a strategic partnership between the key players in the value chain. This way, the partners have stability, and the risk and reward are shared. This is already happening in the battery supply chain where OEMs are directly investing in lithium and nickel projects.
Traceability of supply chains is increasingly becoming more important to OEMs. End consumers are increasingly demanding to know where the key metals come from and ensure that materials are extracted ethically.
Also, the technology performance can depend upon a very tiny amount of a certain specialty metal or chemical. For example, I was managing the supply chain of specialty phosphor materials that enabled Apple to launch wide color gamut DCIP3 displays, which have 25% more colors, on iPhone 6S onwards. While the total amount of phosphor used per device was very small and hence the cost of phosphor per device was fairly low, in terms of enabling this technology performance and customer-facing attribute, there was no other substitute.
This is similar to the situation we see in EVs where the amount of rare earths used is fairly small relative to materials like lithium, nickel and aluminum, but they are absolutely crucial to the technical performance and the customer-facing attributes of vehicle range and performance.
Ionic is accelerating plans for mining, refining and recycling. Are there benefits, and potential complexities, of doing all three?
While there is complexity in doing all three, it is offset as Ionic then becomes a one-stop solution for an OEM or magnet maker. We can process a customer's end-of-life magnets and at the same time offer secured supply of refined rare earths either from our recycling operation or from the Makuutu mine.
Ionic offers a unique value proposition — direct exposure to the rare earths market growth. We have begun production at our Belfast magnet recycling capacity, which offers entry into a circular economy for rare earths with an optimal European location for regional supply of materials for recycling. These efforts are complementary to secure a strategic and traceable supply chain for off-take partners.
S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.