Calgary’s Mkango eyes 2020 output

Sees demand for rare earths about to take off

LONDON • Canada’s Mkango Resources Ltd., one of a handful of rare earth miners outside China, aims to start production in Malawi in 2020 to catch an expected leap in demand for the metals that are used in electric vehicles and other new technologies.

Demand for rare earths, which range from neodymium used in electric motors to lanthanum used to make batteries, is increasing with the emergence of new, greener technology.

While production of coal, iron ore and other bulk commodities is dominated by major mining firms such as BHP and Rio Tinto, rare earths are mostly produced by China and small mining firms such as Mkango.

“We think we will be in production in three years’ time, just at the right time,” William Dawes, the chief executive of Mkango, which is based in Calgary and listed in Toronto and London, told Reuters.

By 2021, he said Mkango would reach full output of about 3,000 tonnes per year of rare earths from the African nation. That would include 1,000 tonnes of praseodymium, neodymium, dysprosium and terbium, used in new electric motors.

Dawes said a rise in rare earth prices was being driven by growing demand, rather than the kind of specula- tive bubble that drove up prices in 2011 when China dominated production and then prompted a crash that pushed many explorers out of the business.

“Very few rare earth projects made it to the pre-feasibility stage and beyond,” he said. “We are one of the few companies to make it over this hurdle, so well-placed as the market recovers.”

Ryan Castilloux at Adamas Intelligence consultancy said there were 36 projects at various stages of pre-production development outside of China. Of these, he said about 60 per cent were put on hold in the last three years because of weak rare earth prices, although prices were expected to recover.

Castilloux forecast doubling global demand for neodymium oxide and praseodymium oxide by 2025 compared with 2016 levels, which he said could create another challenge for miners. If miners could not keep up with demand and prices climbed too high, industries might turn to technologies that did not use rare earths, even if they were less efficient.

Dawes said any rapid surge in the price of neodymium, currently trading around US$45 per kilogram, could encourage the vehicle industry to turn to induction motors, which do not contain rare earths but which are heavier and less-effective than permanent magnet motors that do use rare metals.

Other rare earth miners outside China include Australia’s Lynas Corp., whose Mount Weld is regarded as producing the highest grade of rare earths mine in the world.