Rare Earth Salts Separation Process Could Be Key for Producers Outside China

Sunday May 10, 2015, 7:55pm PDT

By Teresa Matich+ - Exclusive to Rare Earth Investing News

Rare Earth Salts announced plans to commercialize its separations processing business last Thursday. The privately held company claims that its low-cost process could help producers compete with Chinese rare earths pricing.

Competing with Chinese rare earths production costs is certainly a tall order for companies outside of the country. It’s a challenge that many analysts have pegged as impossible, suggesting that end users will eventually choose to pay a premium for a secure supply of rare earths.

Still, Rare Earth Salts believes that its process is environmentally friendly and will cost below $4 per kilogram. Indeed, company CEO Allen Kruse has said he thinks the technology is “the missing piece to the industry being successful in the Western World once again.”

“It will allow current rare earth concentrate producers and prospective producers to directly compete with, and be profitable at, Chinese domestic pricing,” Kruse said in Thursday’s release.

The company claims to have defined a path to near-term production, and has commenced testing the flows and scalability of its proprietary separations technology. Those tests will facilitate the engineering and construction of a commercial production facility in Southeastern Nebraska, with the plant slated to process 10 tons of rare earths concentrate per month.

For Jon Hykawy of Stormcrow Capital, the Rare Earth Salts process is something worth looking at. While he told Resource Investing News it might be a slight stretch to say that the technology will allow every possible producer outside of China to be profitable at domestic Chinese pricing, Hykawy still said good things about the process.

“[T]he Rare Earth Salts process seems to work, and it is very likely much less expensive than conventional separation using solvent extraction,” he said. “For that reason, it is something that the industry, both inside and outside China, as well as interested investors, should be taking a close look at, and supporting.”

Certainly, Rare Earth Salts is already seeing support for its process. Back in October, the company signed a joint development agreement with one of the 10 largest mining companies in the world for the phased development of its plant. Kruse said via email that the company is in talks with several juniors from South America, Europe, North America and Australia.

“We hope to announce something official in the next 90 days or so around this,” he stated. “We are also in talks with consumer product recyclers that produce a concentrate to process for them as well.”

Kruse wasn’t able to divulge too much about how the process actually works, but he did state that it doesn’t produce a hazardous waste stream as all material used in the process is recovered, recycled or removed. The CEO added that equipment for the process is readily available and has been industrially proven across multiple sectors, meaning it will incur lower capital costs and easier expansion. It’s faster than traditional solvent extraction, and has so far resulted in purities of more than 99.995 percent.

To top it off, the technology is efficient for different types of rare earths concentrates. “The process is not chemically dependent on a set type of concentrate makeup,” explained Kruse, “[s]o we could have varying concentrates at any time come in, and it wouldn’t affect our process efficiency.”

In terms of the cost of the process, Kruse pointed out that if Rare Earth Salts were to partner with a company or enter a toll agreement, the cost would be slightly higher than $4 per kilogram. However, he noted that even if the company hypothetically doubled its costs, it would still provide over a 50-percent reduction in concentrate for rare earths concentrate producers compared to prices being quoted in China or France.

“It may mean the difference in profitability for dozens of projects,” he said. “We want to help the industry grow — including the resurgence of a Western supply chain.”

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.