A Swiss investment fund with ties to Russia-born billionaire Vladimir Iorich has put in a bid to buy the shuttered Mountain Pass rare earth element mine in California, raising red flags for U.S. lawmakers concerned about the United States’ dependence on foreign countries for REEs and other metals necessary to maintain the U.S. military’s high-tech arsenal.
To help promote domestic production of these strategic metals and block foreign firms from buying rare earth mines on U.S. soil, Rep. Duncan Hunter, R-California, introduced the Materials Essential to American Leadership and Security, or Metals, Act to the House on March 7.
"The U.S. must no longer be wholly dependent on foreign sources of strategic and critical materials,” explained Duncan. “The risk of this dependence on national security is too great and it urgently demands that we re-establish our depleted domestic industrial base."
If passed, this legislation could be advantageous for Ucore Rare Metals, which has a rare earth element project in Southeast Alaska and is developing a system to recover strategic metals from other domestic sources.
"The act promotes the development of a domestic industrial base for the production of strategic and critical materials, and is in direct keeping with our present objective of establishing a U.S.-based strategic metals complex,” Ucore President and CEO Jim McKenzie said in a statement of support for the Metals Act.
Blocking foreign buyers
Like previous strategic metals bills introduced into Congress over the past decade, the Metals Act recognizes that “China dominates the supply chain for the production of rare earth elements, controlling more than 90 percent of the world's production and that they have used this dominance geopolitically in the past by selectively enacting a de facto embargo on the export of rare earth elements.”.
The 2009 re-opening of the Mountain Pass Mine in the Mojave Desert of eastern California was hailed as a critical first step in breaking the United States’ dependence on foreign sources of the rare earths used in many high-tech consumer goods and military devises.
Due to a drastic drop in rare earth prices, however, this mine was short-lived. By the end of 2015, Molycorp, the company that was operating the mine, filed for bankruptcy and put the REE operation on care and maintenance.
As a result of the bankruptcy and restructuring of Molycorp, the Mountain Pass Mine and associated land and equipment is slated to put on the auctioning block this month.
In February, the Wall Street Journal reported that a Swiss investment fund connected to Iorich, who amassed billions investing in Russia mining ventures, has made a bid to buy Mountain Pass.
The article went on to say that any new ownership of Mountain Pass would likely need the approval of the Committee on Foreign Investment in the U.S., a body which reviews transactions that could have an effect on U.S. national security.
Wording in Hunter’s Metals Act would prohibit the Committee on Foreign Investment from allowing the sale of Mountain Pass, or any other rare earths mine in the United States to Iorich.
Bridging the valley of death
The meat of the Metals Act is the creation of a working capital fund that “would allow domestic companies to access the capital they need to bridge the ‘Valley of Death’ and develop new, advanced, green technologies for the production of strategic and critical materials,” according to Hunter.
This valley of death referenced by the California congressman has been especially perilous for companies trying to develop rare earth mines in the U.S., or anywhere outside of China.
This is because the Middle Kingdom has been able to leverage a nearly four-decade monopoly on these metals to hold prices low enough that companies outside its borders could not compete, especially in countries with stronger environmental laws and the higher production costs that go with them.
For a few years, starting in about 2008, China severely restricted its REE exports, pushing the prices of these various high-tech metals skyward. This triggered a rush for non-Sino supplies of the metals and resulted in the re-opening of Mountain Pass. A combination of the global economic slump in 2009 and China dumping cheaper rare earths back into the global marketplace, the prices plummeted nearly as fast as they climbed, making numerous feasible REE projects outside of the Middle Kingdom once again uneconomic.
Levels playing field
The Metals Act is designed to level this playing field for U.S. companies hoping to produce these metals in the United States through the creation of the “Strategic Materials Investment Fund,” which would provide five-year, interest-free loans to companies that succeed in developing new production or manufacturing techniques for strategic and critical materials.
“The bill supports the U.S. domestic industrial base by aiding domestic investment opportunities and consequently mitigates the risk of a supply chain interruption for materials that have become essential for American military superiority,” according to a March 7 statement announcing the introduction of the Metals Act.
The money for this fund would come from the use of about 1 percent of the Department of Defense’s overhead costs for major defense acquisition programs that are reliant upon strategic and critical materials.
The Metals Act prohibits the U.S. military from lowering the number of weapons it procures and the fund would reimburse defense programs that face higher costs for acquiring domestically-sourced strategic and critical materials.
Good news for Ucore
Ucore, which already has an advanced exploration staged rare earth project in the United States and is working to pioneer a new technology that could transform the way rare earths and other strategic metals are processed, is already making strides towards meeting the objectives of the Metals Act.
The Dotson Ridge deposit at Ucore’s Bokan Mountain project in Southeast Alaska contains an indicated resource of 4.79 million metric tons averaging 0.6 percent (63.54 million pounds) total rare earth oxides. What sets this deposit apart from higher grade deposits such as Mountain Pass is that about 39 percent of the contained rare earths are of the heavy variety, a subset that includes dysprosium, europium, terbium and yttrium.
In a 2011 study, the U.S. Department of Energy named these four heavy rare earths among the five most critical and supply-risky materials in the country.
These same REEs are critical ingredients to much of the high-tech U.S. military hardware.
A 2011 paper published by the Center for Strategic Leadership, U.S. Army War College, highlighted the need to secure strategic materials.
“The vitality of a powerful nation depends upon its ability to secure access to the strategic resources necessary to sustain its economy and produce effective weapons for defense. This is especially true for the world’s two largest economies, those of the United States and China,” the authors inked in the report.
The report concluded that the United States should up its stockpile of strategic materials such as rare earths and promote the development of strategic metals deposits.
Since that paper was published, the Defense Department has both upped its stockpile of certain rare earths and completed a mineralogical and metallurgical study on the heavy rare earths-rich deposit at Bokan Mountain project.
Strategic Metals Complex
While Bokan Mountain could provide a domestic source of heavy rare earths, the need for an economic and environmentally sound way to separate these strategic metals thrust Ucore on the path of pioneering a better way to process REEs and other specialty metals.
By 2014, this quest had led Ucore to IBC Advanced Technologies, a Utah-based company that specializes in molecular recognition technology, or MRT, a highly selective process that had already solved other tough metals recovery problems.
In the MRT process, SuperLig resins are engineered to grab ions based on a number of traits such as size, chemistry and geometry. These resins are loaded into a column and latch onto the targeted material suspended in a solution that is pumped through the column. Simply rinsing the resin with a mildly acidic solution releases a nearly pure version of the material the resin is engineered to bind to.
IBC developed resins for Ucore that specifically bind with ions associated with rare earths and have proven them to be highly effective in separating the REEs from Bokan Mountain at the pilot plant scale.
By August of last year, the pilot plant, dubbed SuperLig-One, had successfully separated scandium and dysprosium from a solution derived from Bokan. This process proved to be so effective that the plant recovered more than 99 percent of the scandium and dysprosium that was in the solution at greater than 99 percent purity.
These pilot results were confirmed by an independent third-party laboratory, paving the way for the Strategic Metals Complex, a planned full-scale plant to process high demand specialty metals.
The same molecular recognition technology used to separate the notoriously tightly interlocked rare earth elements is also being applied to recycle platinum group metals – rhodium, palladium and platinum – from discarded catalytic convertors in the United States. These metals, especially rhodium, are also considered critical.
At full capacity, the PGM separation part of the Strategic Metals Complex is expected to produce 750,000 troy ounces of virtually pure rhodium, palladium and platinum.
The PGM facility is expected to encompass about 25,600 square feet of a planned three-acre complex that Ucore hopes to build soon.
The rare earths explorer turned metals separation pioneer said it is nearing final selection of feedstock for the rare earths side of the Strategic Metals Complex. Once the source material is identified, Ucore and IBC will engineer a facility specifically for the material.
Logistics will play a crucial role in determining the site of this first strategic materials complex being planned by Ucore and the company has indicated that Houston, Texas, is one of primary locales under consideration.
