➤ Saskatchewan can compete on costs with rare earths refined in China.
➤ AI has enabled the Saskatchewan Research Council to design a competitive rare earth refining process.
➤ Robot production stands to fuel demand beyond the electric vehicle sector.
 |
| Mike Crabtree, president and CEO of the Saskatchewan Research Council. Source: Saskatchewan Research Council. |
Canada's sparsely populated province of Saskatchewan is gearing up to compete with China on refining rare earth metals, which are critical to building things such as electric vehicles and wind turbines.
The Saskatchewan Research Council (SRC), a government-backed organization, reached commercial production in September at a demonstration plant producing neodymium-praseodymium (NdPr) metals at a rate of 10 metric tons per month. NdPr metals are in the powerful magnets used in electric motors and other technologies. The SRC plans to produce about 400 metric tons of NdPr in 2025 and eventually license the technology out to the private sector to support growing EV supply chains.
Meanwhile, commercial production of NdPr in North America, a first according to the SRC, will give the market an alternative source to China. China controlled about 92% of rare earth processing in 2023, the International Energy Agency has estimated.
S&P Global Commodity Insights caught up with Mike Crabtree, SRC president and CEO, on Sept. 25 to discuss the rare earths market, opportunities and the SRC's strategy. The following conversation has been edited for clarity and length.
S&P Global Commodity Insights: Is the rare earths market tough to compete in? You're primarily up against China.
Mike Crabtree:
The first is the erratic or volatile status of EV demand across the globe. And that's stalled a little bit. Now, all indications are that that's temporary. But temporary could be one, two, or three years from now. So it's short term, but it's significant.
The second is, as you mentioned, China is a major player. People always quote to me, "They control 85% to 90% of the market." Well, actually that's not true. It's substantially more than 90% because you have to look at the supply chain from the actual rare earth mining through to the provision of magnets. And if you look at that, it's almost impossible to navigate through that without touching China.
And they define the price at which they will purchase the beneficiated ore. And of course they control ... the prices [at] which the NdPr will be sold, not just from their product, but globally.
How do you compete against that?
We've got to be able to sell NdPr at the same price as the Chinese and be profitable. And that's what we've done. And we've done that by applying a lot of expertise and designing our own equipment and applying AI to the system.
Tell me a little bit about that.
When we originally got sanctioned to go ahead, we were going to buy all our equipment from China, because that's what everybody does. [Then] the Chinese brought in their export control law so we couldn't do that.
So we designed and built in-house our own equipment. But we realized that, with the environmental controls and sustainability that we're building in, our capital cost was going way up above what you would expect to see from a Chinese plant. So what we said is, we need to really drive down operational costs. So for example, a large part of the plant is separation, which is the core of the refinery.
In China, a separation system of this scale would need 80 people to operate it. Our process operates with four people and AI.
Coming to your [competition] question from a little bit before: Rare earths — NdPr — are not going to stay at [current prices of] $55,000-$60,000 a [metric] ton for that long. If you look at the demand curves beyond the next two, three, and four-year horizon, the demand is going to rapidly exceed supply. So, having these midstream plants already built, optimized and ready to go is going to be in the medium-long term extremely beneficial to Canada and beyond.
The challenge is to be able to survive financially these next, two, three, four years.
You have said you don't expect to get a premium for your product. But do you become a supplier of choice in some markets such as North America or the EU?
We really are. There is a real advantage if you can compete on price. The preference is to be able to lock up ... non-Chinese production.
There has been increasing talk of critical mineral stockpiles in North America and Europe. Do you expect rare earths to factor large there?
I was at a meeting the other day where people were talking about broken supply chains in emerging critical minerals like lithium and rare earths. And I listened to that and I said, "You know what, they're not broken supply chains. There are no supply chains there."
There is no [significant] supply chain capacity in the midstream outside of China. I mean, if you look at the major players coming on like Lynas Rare Earths Ltd. and [MP Materials Corp.'s] Mountain Pass and some of the European players, they still have not moved into that midstream yet.
What does scaling up look like for the SRC? Are you planning to license out technology?
We're a Treasury Board Crown corporation. Fundamentally our purpose is to de-risk this for private investment.
Part of my background is in private equity, and I talk to my private equity buddies, and what they say is: "You know what? We just can't make the figures work, because we can't get any sort of material forecasts out beyond the day after tomorrow." And so there's an awful lot of money sitting on the sidelines waiting for this to be proven out. That's the fundamental thing that SRC has designed. This is why the government funded us.
We will continue to expand and build upon the commercial demonstration plant that we've got. So, for example, we'll be producing dysprosium, terbium and samarium — some of the other very, very high-value metals — and we're looking to move downstream into strip casting [which can produce a flat metal product for rolling]. But one of the highest impact things that we can do that you alluded to is to license out the equipment and the AI systems.
On the demand side of rare earths, one thing that increasingly crops up is not only automation in industrial processes and the use of robots, but also the broader adoption of robots in society as helpers. With all those moving parts often requiring magnets, what's your view on rare earth demand in the long term?
I think it's going to be very volatile over the next one to four years. But if you look at the medium and long term, it's just no question. It's going to be absolutely huge. It's really interesting.
About two, three years ago, at a conference in Japan, [we met] one of the original guys who invented rare earth magnets way back in the day. We were talking to him and [mentioned EVs] and demand, and all this sort of stuff, and he said, "You know, in Japan here, yes, we understand that there is going to be that uptake for electric vehicle motors. But we see that potentially being dwarfed by the need for actuator motors for robots."
So the Japanese are already thinking that it's going to be robots that are going to be utilizing these NdPr magnets. And even more powerful NdPr magnets — the next generation on from this.