Canada's first rare earths projects underway in push to build new industry

This is the second part of a two-part story about Canada’s efforts to become a supplier of choice for strategic critical minerals, including rare earth elements. Part 2 examines key projects underway as well as provincial activities. Part 1, published June 23, looked at what will be required to attain the goal and current federal initiatives.

For more information, read our backgrounder on critical minerals and why they are becoming increasingly important worldwide for producing clean technologies.

Canada’s first operational rare earths mine is expected to start production this summer — an important step toward establishing a rare earths industry in the country.

The Nechalacho rare earths demonstration project near Yellowknife in the Northwest Territories will start producing a mixed rare earth concentrate in July, David Connelly, vice-president of strategy and corporate affairs for Cheetah Resources Corp., told Research Money.

“Nechalacho secures Canadian leadership of the upstream portion of the rare earth elements value chain,” he said.

It is also the first project in Canada where an Indigenous group, Yellowknives Dene First Nation, is the contracted miner and is extracting resources from their traditional territory.

The mine is one of several projects underway to build the Canada's capacity to produce and process rare earth elements, which will be critical for the development of technologies such as electric vehicles. In the past, China’s monopoly-like control of the global market for rare earth materials has discouraged investment in Canadian projects.

Rare earth metals will be mined in NWT and extracted in Saskatoon

Yellowknife-based Cheetah Resources, wholly owned by Vital Metals based in Australia, operates the Nechalacho project and owns the surface and mid-level resources at the mine. Toronto-headquartered Avalon Advanced Metals, which originally developed the rare earth deposit, owns the resources found below a depth of 150 metres above sea level.

Cheetah Resources’ strategy will be to start small with production to gain customer acceptance before scaling up.

To reduce the project’s capital costs, the company is deploying a sensor-based ore sorter at Nechalcho, a first in the metals industry. The technology detects the rare earths and uses puffs of air to sort the ore into streams of waste rock and a rare earth concentrate.

Once sorted, the Nechalacho mine’s rare earth concentrate will be shipped by barge across Great Slave Lake to Hay River, then transported by truck or rail to Saskatoon. The first shipment of concentrate is expected to arrive in Saskatoon this November.

Cheetah has signed a lease with Saskatoon-based Northstar Innovative Developments Inc. to build a $5.25-million hydrometallurgical facility in Saskatoon to extract individual rare earth metals from the concentrate. The resulting mixed rare earth oxide will be sold and shipped for further refining to REEtec in Norway.

Cheetah plans to start selling rare earth oxide from Saskatchewan in 2022. Initial production will average 2,000 tonnes of rare earth oxides equivalent per year. However, this will grow to 5,000 tonnes annually in 2024, or about 4 percent of current world production, Connelly said.

Saskatchewan to build rare earths processing plant

In a sign of the public and private sectors’ push to establish a rare earths industry in Canada, the Saskatchewan government has also committed $31 million to build a new rare earth processing plant in north Saskatoon.

The 69,000-square-foot facility, owned and operated by the Saskatchewan Research Council (SRC), will concentrate an imported rare-earths ore feedstock, called “monazite,” into mixed rare earth carbonate, and also separate the carbonate into pure-grade rare earth oxides.

“This commercial demonstration will offer some de-risking for private sector investment,” Muhammad Imran, vice-president of the rare earths elements division at SRC, said in an interview.

“Our objective going forward would be for Saskatchewan to be a hub for the rare earth industry and, in future, we would like to see a completely vertically integrated rare earth industry within Saskatchewan and Canada."

Construction of SRC’s facility is expected to be complete by the end of 2023, with commissioning in early 2024 and then ramping up to full production.

Along with the midstream processing capacity, the industry would include the upstream supply chain (mines producing rare earth ores), as well as the downstream production of permanent magnets and other rare earth products.

The monazite production unit (MPU) of SRC’s facility will be able to handle commercial-scale volumes of 3,000 tonnes per year of rare earth ore feed, while the solvent extraction unit will have the capacity for 1,500 tonnes of feed from the MPU to produce rare earth oxides. The oxides will be sold for further refining, initially to offshore customers until Canadian and North American markets are established.

The SRC is still considering various countries for securing the amount of rare earth ore feed it needs for its processing facility.

“In the future, we think that there’s large potential to secure this feed within Canada,” Imran said.

Ontario firm to produce battery-grade cobalt

In Ontario, another key project will help advance the federal government’s strategy to establish and grow a domestic electric vehicle battery supply chain that requires critical minerals.

First Cobalt Corp., based in Ontario, received $5 million each from the federal and Ontario governments to recommission and expand its hydrometallurgical cobalt refinery in North Cobalt, about 500 km north of Toronto.

Once complete, the refinery will be the first and only facility in North America capable of producing 55,000 tonnes of battery-grade cobalt sulphate annually, equivalent to 5,000 tonnes of refined cobalt which is about five percent of the global market. Production is scheduled to start in October 2022.

The cobalt is used in the cathode of lithium-ion batteries in numerous products, from electric vehicles to many electronic devices.

“Canada has to own the battery supply chain,” Trent Mell, president and CEO of First Cobalt, said in an interview.

China now produces about 80 percent of the world’s cobalt, he said, adding: “By virtue of starting this refinery, we’ll be the second-largest refiner outside of China.”

The partnership with the federal and Ontario governments was a huge advantage, Mell said. “Not only did that partnership open up the capital market to us, it did de-risk [the project] in the eyes of a lot of people.”

Cobalt’s supply of cobalt ore will come at first from the Democratic Republic of the Congo until Canada can ramp up mining projects for critical minerals.

Mell said the company will initially sell its cobalt sulphate to markets in Europe and possibly Asia until a North American market is established.

Ontario critical minerals strategy in the works

Ontario, which already produces several critical minerals, is working on a strategy to develop a complete, integrated supply chain in the province for critical minerals, including rare earths.

“The Ontario government is developing a critical minerals strategy to generate investment and increase Ontario’s competitiveness in the global market, while supporting the transition to a cleaner, sustainable global economy,” Drew Campbell, spokesperson for the Ministry of Energy, Northern Development and Mines, said in an email to Research Money.

Ontario is well-positioned to become a supplier, producer and manufacturer of choice for certain critical minerals, particularly nickel, copper, cobalt and platinum group elements, Campbell said.

Several advanced exploration projects have the potential, within five years, to product other critical minerals including lithium, graphite, niobium, barite and magnesium, while rare earth deposits are being actively explored, he said.

Ontario currently has 14 critical mineral projects with combined capital costs representing approximately $6.8 billion in planned expenditures, Campbell noted.

Quebec's plan in place, Alberta working on its plan

In Quebec, the François Legault government released a plan last year to develop critical and strategic minerals. The province already produces graphite, nickel, titanium and zinc, and is the only producer of niobium in the Northern Hemisphere.

Quebec’s plan includes: supporting and enhancing R&D on the extraction, transformation and recycling of critical strategic minerals (CSMs); improving support for basic exploration of CSMs, stimulating the use of artificial intelligence initiatives to develop autonomous, “stand-alone” mines; and developing technologies for industrial-scale manufacturing and marketing of batteries for transportation electrification and energy storage.

Quebec plans to spend $90 million between 2020 and 2025 to implement the plan.

In 2019, the Quebec government provided $4.8 million to Lithion Recycling Inc. for a $12-million project to develop a recycling technology for lithium-ion batteries. Last year, the government provided a loan of $3 million to Geomega Resources Inc. toward construction of a $4.8-million demonstration plant for recycling rare earth elements from magnets.

Meanwhile, the Alberta government in 2020 established the Mineral Advisory Council to provide strategic advice, guidance and recommendations on a minerals strategy and action plan. The government intends to make Alberta the most competitive jurisdiction for lithium production in North America, according to Alberta Energy Minister Sonya Savage.

Establishing full supply chain will require large investments

Trent Mell at First Cobalt told Research Money that establishing a rare earths industry with a complete, integrated supply chain in Canada will take several steps, each requiring investments of between $200 million to $1 billion.

“Discussions are going on in government offices and board rooms right now as to where they’re going to locate development and what that looks like,” Mell said.

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