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A Site Selection Web Exclusive, June 2012
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Magnetic Attraction

Québec may land a new rare-earths separation facility, if all the right pieces can fall into place.

ONLINE INSIDER
Bécancour Waterfront Industrial Park in Québec is the place chosen earlier this month by Innovation Metals Corp. for a major rare-earths separation facility that would process mineral sands from around the world.
Photo courtesy of Bécancour

by ADAM BRUNS
The site plan for IMC’s project.
The site plan for IMC’s project.

Used to be that Rare Earth only meant good-time '70s white soul hits like "Get Ready" and "I Just Want to Celebrate," recorded on Motown's first-ever "white rock" record label.

These days the phrase — denoting the rare-earth elements so important to magnets used in modern electronics, wind turbines, hybrid and electric vehicles and appliances, among other technologies — is likely to induce more heebie jeebies than boogie woogie. Most of the world's rare earths are produced and hoarded in China, whose government uses the elements as a lure to global manufacturers. (Molycorp, situated near substantial deposits in Mountain Pass, Calif., is among the few exceptions).

But a new project might help rare-earth consumers and miners get their groove on in North America.

Toronto-based Innovation Metals Corp. (IMC) on June 1 announced it had chosen Bécancour Waterfront Industrial Park, located on the St. Lawrence River halfway between Québec City and Montréal, as the site for a proposed rare-earth element separation complex that would involved an investment of between $200 million and $300 million and initial employment of 300.

To Patrick Wong, IMC's CEO, the project could be the beginning of what he calls "Clean Tech Valley," where IMC's refinery "serves as the key asset in an industrial complex that would make Disney Land look archaic," he writes in an email. "Because many high-tech applications require rare earths, we believe manufacturers will come to get access to this material and share knowledge in our extensive R&D efforts."

Rare earths are used widely in high-technology and clean-energy products because they impart special properties of magnetism, luminescence, and strength. Rare earths are also used in weapon systems to obtain the same properties.

The location choice was made with the help of GENIVAR, one of Canada's largest full-range engineering companies. Four sites in Québec and two in Ontario were evaluated, though Wong says some sites in the U.S. were contemplated early on.

"Bécancour is an outstanding location for our future plant," said Wong on June 1. "The industrial park has direct access to multiple hydroelectric power sources, through a modern electricity distribution network. It also hosts extensive deep-water port facilities with full year-round access, a bulk-liquid terminal and a railway line connected to the CN railway network."

"What clinched the Bécancour site for IMC was the presence of a leading industrial producer of hydrochloric acid and caustic soda, already located in the industrial park," said Gareth Hatch, president of IMC. "These bulk chemicals are an essential part of the rare-earth separation process, and could be inexpensively piped directly to our future facilities."

That would be the operation of Illinois-based Olin, whose plant has been located in Bécancour since 1975, and was acquired by Olin in 2007. More than 2,000 hectares (4,950 acres) of "high load bearing capacity" land for development are currently available at Bécancour, which also is home to facilities from such companies as ARKEMA, Canadoil Forge Itee, Hydrexcel and Alcoa.

IMC has taken out an option on a specific site within the industrial park, near Olin's facility, with the choice of converting the option to a long-term lease or purchase agreement. The next steps will be the environmental assessment and permitting for the chosen location, followed by a pre-feasibility study on the design and construction of a 15,000 t / year rare-earth separation plant to be built on the site.

Enter the Matrix

The U.S. Geological Survey defines the rare earths as, oddly enough, "a relatively abundant" group of 17 elements composed of scandium, yttrium, and the lanthanides. "The elements range in crustal abundance from cerium, the 25th most abundant element of the 78 common elements in the Earth's crust at 60 parts per million, to thulium and lutetium, the least abundant rare-earth elements at about 0.5 part per million," says the USGS. "The principal economic sources of rare earths are the minerals bastnasite, monazite, and loparite and the lateritic ion-adsorption clays.

Getting the elements out of those minerals is where IMC comes in.

"Our business model is built on the provision of low-cost tolling facilities for rare-earth separation, with some of the lowest operating costs in the world," said Wong at the project announcement. "Siting our facility at Bécancour will further enhance our ability to deliver on this vision."

Craig Wood, director of projects for GENIVAR, says the IMC site selection process began with a meeting with Patrick Wong that identified major requirements for a plant designed to take in multiple types of concentrate from various mine sources coming in by rail and/or by deep-sea transport. Initially, six potential sites were identified:

  • Bécancour Industrial Park, Québec;
  • Varennes Industrial Park, Québec;
  • Beauharnois Industrial Park, Québec;
  • Salaberry-de-Valleyfield Industrial Park, Québec;
  • Maitland Industrial Park, Ontario;
  • Sarnia BlueWater Energy Industrial Park, Ontario.

"All of these sites were visited by IMC and GENIVAR with the exception of the Sarnia site that was visited only by IMC," says Wood. "The four Québec sites were visited the week of March 19th, 2012 and the two Ontario sites were visited during the week of April 10th, 2012."

After discussions with IMC senior management, four sites were retained for a more detailed assessment: Bécancour, Beauharnois, Salaberry-de-Valleyfield and Sarnia BlueWater.

A matrix of 22 criteria was developed in collaboration with IMC to assess the individual sites. Each of the following was assigned a criteria score between 0 and 4, and then a weighting score ranging from 1 to 5 (1=not important and 5=essential). "The site assessments of the four potential sites were then conducted based on the major project determinants such as energy, transportation and handling of raw materials and finished products, chemical supply, environment and infrastructure," writes Wood:

  • Availability of electricity;
  • Availability of process water;
  • Proximity to emergency services (fire, medical, evacuation plan);
  • Road infrastructure;
  • Site location;
  • Site cost;
  • Site drainage and storm water infrastructure;
  • Wetlands or floodplain issues;
  • Hydrochloric acid (HCl) supplier;
  • Sodium Hydroxide (NaOH) supplier;
  • Soda Ash (Na2CO3) supplier;
  • Oxalic acid supplier;
  • Proximity to the loadout, rail and port facilities;
  • Site topography;
  • Site soils and foundation conditions;
  • Environmental Impact Assessment (EIA) and permitting requirements;
  • Waste disposal;
  • Compatibility with future expansion requirements;
  • Workforce availability;
  • Housing issues (workers);
  • Financing and incentives;
  • Availability of general contractors.

Wood writes that the facility required at least 30 hectares [acres] of land and 1.5 million tons of process water, and would consume 180,000 tpa (tons per annum) of HCl, 150,000 tpa of NaOH, 10,000 tpa of Na2CO3, and 12,000 tpa of oxalic acid, in addition to some proprietary chemicals.

Asked about the permitting maze ahead, Wood says, "In Québec, according to current laws and regulations, the IMC project would not be subject to the environmental evaluation procedures as required by Article 31.1 of the Québec Environmental Quality Act (QEQA) (requiring a full impact assessment process) since production capacity of the HREE Separation Plant does not exceed 7,000 tpd.

"A Certificate of Authorization will be required as per Article 22 of the QEQA," Wood further explains. "This includes a project description and establishment of the baseline environmental conditions for the site. The project description generally identifies the proponent, includes the objectives of the project, location, land owner, description of the process and any alternatives, relevant environmental components, anticipated impacts, schedule, any subsequent phases of the project, any other projects in the study area, and the proposed public consultation approach. Since the IMC HREE plant site is located in an industrial park already zoned for heavy industry and away from residential areas, the environmental permitting and social acceptability of the project will be easier."

Permits for the construction and operation of the HREE plant also are required. "The estimated timeline for the environmental assessment and obtaining the construction and operating permits generally takes approximately six months providing the engineering is available," says Wood.

As with so many Québec industrial projects, Wong says the availability of stable, low-cost power "was very important to our decision-making process, especially when we are considering to make metals from oxides where a large cost component is in electricity. Electricity is definitely one of Québec's largest assets, and if it does things right, it can eliminate its dependency on foreign oil and increase the value of their power assets."

Asked if the generally strong support in Québec and Ontario for both renewable energy and electric vehicles was a factor, he says, "the support of EVs and hybrids is a big part of that… we are witnessing the world's largest arbitrage take place, and that is between the two super fuels, natural gas and oil. On an energy equivalent basis, natural gas is trading around $12/bbl of oil, but in order to complete this arbitrage and make natural gas fungible, we need to find a common use. The answer is in transportation fueled by electricity which is fed by natural gas cogen facilities. However, if you are lucky enough to be blessed with abundant hydropower, then that would come first before building natgas cogen facilities." 

All Over the World

Where will the mineral sands come from? IMC's announcement said the company has "recently commenced discussions with sovereign governments and other entities that have an interest in the processing of rare-earth-bearing mineral sands. IMC would provide assistance in the design and construction of appropriate local facilities for initial rare-earth processing, with heavy-rare-earth concentrates being shipped to Québec for subsequent separation and purification."

Asked to name countries, Wong writes, "There are large mineral sands projects being looked at in the Middle East and equatorial regions of the world. We are working with governments to maximize the value of their resource, and the small amount of heavy rare-earth concentrate they will produce can be sent to our Bécancour plant for refining."

The slots are limited, however.

"We have been speaking with many rare-earth mining companies but the problem is we can only take four or five," writes Wong. "It is the best solution for the mining company to toll their concentrate through a plant like ours where they don't have to pay for the capital cost and the tolling charge is lower than their own cost of capital. In addition, our group of mining companies will also have their material marketed in a transparent auction process allowing them to keep complete control over their product. The next step in our process is to finalize a non-binding LOI [letter of intent] with the producer consortium, which will happen over the next few months."

Exploration efforts to develop rare earths projects continued to surge in 2011, and investment and interest increased dramatically, said a USGS report issued in January. "Economic assessments continued in North America at Bear Lodge in Wyoming; Diamond Creek in Idaho; Elk Creek in Nebraska; Hoidas Lake in Saskatchewan, Canada; Kipawa in Québec, Canada; Lemhi Pass in Idaho-Montana; and Nechalacho (Thor Lake) in Northwest Territories, Canada," said the report. "Economic assessments in other locations around the world include Dubbo Zirconia in New South Wales, Australia; Kangankunde in Malawi; Mount Weld in Western Australia, Australia; Nolans Project in Northern Territory, Australia, and Steenkampskraal in Western Cape, South Africa."

The report says the estimated value of refined rare earths imported by the United States in 2011 was $696 million, an increase from $161 million imported in 2010. But that value reflected dramatically increased prices, as consumption decreased from 2010 across seven rare-earth import categories. But "demand remained stable for rare earths in many applications, especially automotive catalytic converters, permanent magnets, and rechargeable batteries for electric and hybrid vehicles."

"Based on reported data through August 2011," said the report, "the estimated 2011 distribution of rare earths by end use, in decreasing order, was as follows: catalysts, 47 percent; metallurgical applications and alloys, 13 percent; alloys, 11 percent; glass polishing and ceramics, 10 percent; permanent magnets, 9 percent; ceramics, 5 percent; rare-earth phosphors for computer monitors, lighting, radar, televisions, and x-ray-intensifying film, 5 percent."

Bastnäsite deposits in China and the United States constitute the largest percentage of the world's rare- earth economic resources, while monazite deposits in Australia, Brazil, China, India, Malaysia, South Africa, Sri Lanka, Thailand, and the United States constitute the second largest segment, said the USGS report, which then offered a tantalizing conclusion:

"Undiscovered resources are thought to be very large relative to expected demand," it stated. "A very large resource enriched in heavy rare-earth elements is inferred for phosphorites of the Florida Phosphate District."

Diversified Play

IMC's business model is not confined to North America. Nor is it necessarily aligned against the Chinese business model. In fact, the company initiated research with a Chinese research institute in order to prove viable its concept that "multiple rare-earth concentrates, produced from various REE-bearing mineral sources, can be processed together effectively, resulting in attractive recovery rates."

"There is a popular belief in the industry that a 'mine to market' strategy is the only way to succeed in this sector," says the IMC website. "This vertical-integration model is often based on flawed assumptions pertaining to value creation; in most cases, the jump from one part of the value chain to the next, cannot overcome a junior-mining company's cost of capital. Pursuit of this strategy alone, has the potential to lead to shareholder-value erosion."

IMC says the transport of smaller, light REE facilities from China is currently happening. IMC itself, with partner Advanced Material of Japan Corp., is planning to build a light + medium REE separation plant in Vietnam with 1,000 tpa production capacity, using funds raised via an initial public offering. In addition, IMC will also partner with a prominent third party to procure an additional 1,600 tpa of separation capacity at another L/MREE separation facility in Vietnam. But the Québec project would be, says IMC, among the first to seek to process heavy REE using solvent extraction technology.

IMC forecasts that China's dominance of the rare-earth market will drop from 95 percent to 70 percent as more light and medium deposits come into production. Asked to compare and contrast the Québec play to China's, Wong says, "China is a good example where their efforts in controlling the export of rare earths, has encouraged manufacturers to build in China where they can get steady flow of critical raw material."

Wong says issues surrounding Chinese policies in rare earths "have been blown out of proportion, but it comes down to what seems like a heavy-handed way to encourage manufacturing to move to China. Québec, as far as I know, does not have any export policy on its rare earths nor do I believe they should have one. The region is competitive enough to attract manufacturers from around the world on its own merits and being close to our separation plant will provide benefits beyond just access to the raw materials. In addition, we have contemplated reserving 30 percent of our capacity for government programs including military stockpile programs as we understand a few countries will want to do this. Federal and provincial governments could use programs that are already in place to lend or grant money to companies who will move their manufacturing to Québec and this capital will specifically go towards buying the refining capacity of the critical raw material they need."

Wong says interest is high from potential customers in the fields served by rare-earths elements.

For Real This Time?

Québec officials will hope that the IMC project gets out of the blocks better than the $1.2-billion project announced there in summer 2008 by REC Silicon, which by all signs has not progressed. Meanwhile the company, rocked by global financial crises as well as particular stress on the integrated solar energy market, has had to close one of its signature facilities, at Herøya in its home country of Norway.

A spokesperson for the Québec government said the Innovation Metals project is under negotiations, and therefore declined to comment. The same silence applies to the nearly four-year-old REC Silicon project. Calls placed to REC's investor relations office in Norway were not immediately returned.

Wong says that Invest Québec has been helpful, "but we have not asked for any financing or incentives beyond what is generally offered in existing re-training programs. We don't believe in government grants, and think this should be a solution made by the private sector. We would look at government loan programs to help end users to buy refining capacity if they move manufacturing facilities to the area and hire local workers. We don't envision these loans being made to IMC but to the end users themselves."

REC's production plant for polysilicon, the main raw material for the manufacture of semiconductors and solar panels, would have employed 300 people — the same number that IMC projects to directly employ. But Wong says the potential payroll of the cluster envisioned by IMC reaches well beyond that number.

"This is a very strategic facility that can attract other manufacturing businesses around it so it's much more than just the people we hire directly," writes Wong.

"Our Clean Tech Valley vision is one where a number of different companies in the clean tech industry such as wind turbine, magnet, hybrid auto parts, lighting and catalyst manufacturing companies locate themselves near us in a cluster," he says. "We chose a site that could accommodate this type of growth."

Adam Bruns
Managing Editor of Site Selection magazine

Adam Bruns

Adam Bruns has served as managing editor of Site Selection magazine since February 2002. In the course of reporting hundreds of stories for Site Selection, Adam has visited companies and communities around the globe. A St. Louis native who grew up in the Kansas City suburbs, Adam is a 1986 alumnus of Knox College, and resided in Chicago; Midcoast Maine; Savannah, Georgia; and Lexington, Kentucky, before settling in the Greater Atlanta community of Peachtree Corners, where he lives with his wife and daughter.

   



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