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Home Advantage: How Domestic REE Supply Is Supercharging North American Companies

NetworkNewsWire Editorial Coverage: The global outcry for ditching fossil fuels in favor of cleaner, Earth-friendly technologies and sustainability is reaching deafening levels. One problem is that North America has backed itself into a corner by allowing China to take a dominant position in the supply of rare earth oxides. These elements are irreplaceable in the production of permanent magnets, which are, in turn, irreplaceable in products key to the green energy transition, such as windmills and electric vehicles. The United States and Canada have both been vocal about their desire to end their reliance upon the East and aggressively establish domestic supply chains of the critical rare earth elements (“REEs”), which hold the key to climate-change and sustainability goals. Further, the concentration of supply coming from China means that political tensions, trade disputes or other geopolitical issues are constantly looming, posing threats to supply chains and sustainability objectives. A domestic supply chain averts those risks, while also providing cost stability and supply resilience, stimulating job creation and economic growth, and even protecting national security. Only a handful of leaders are spearheading innovation to catalyze these national initiatives, and Ucore Rare Metals Inc. (TSX.V: UCU) (OTCQX: UURAF) (Profile) with its transformative technology, RapidSX(TM), is one of them. While Ucore is a standout from an upstream view, other companies, such as Tesla Inc. (NASDAQ: TSLA), General Electric Company (NYSE: GE), General Motors Company (NYSE: GM) and Ford Motor Company (NYSE: F) are downstream companies well positioned to capitalize on all the benefits of a domestic supply chain and which are equally committed to national security and global sustainability.

  • As part of China’s pledge to reach carbon neutrality before 2060, the country may announce bans on exports of rare earth technology
  • The U.S. DoD recently awarded a $4 million contract to Ucore to explore its innovations
  • Ucore may receive additional DoD funding after the successful completion of the initial contract
  • The innovative company is commissioning a demonstration facility and designing a commercial-scale facility in Louisiana

Supply Crunch Looming

There are plenty of reasons for the United States to voluntarily sever ties that have allowed China to develop a monopoly on REE supply. However, there is the potential that China will force North America’s hand anyway. In Q3 2020, Chinese President Xi Jinping stated that his country intends to see a peak in carbon dioxide emission in the next decade on its path to reach carbon neutrality, a balance between carbon emissions and carbon absorption, before 2060. China, the world’s biggest emitter of carbon emissions and a land of 1.46 billion people, committing to such a goal could mean it needs to appropriate all minerals and technology for itself as demand is booming.

Beijing has not been shy about saying it is deliberating over the idea of restricting or even banning the export of all things REE. This comes at a time when, according to Markets and Markets, the rare earth minerals market is expected to experience 12.3% compound annual growth to reach $9.6 billion by 2026. When President Joe Biden took office in 2020, one of his first executive moves was to join the group of countries pledging to the Paris Agreement, a binding international treaty on climate change, obliging the country to reach net zero emissions by 2050.

The Biden administration wants a legacy as stewards abating global warming, as evidenced by the allocation of billions of dollars to establish national infrastructure for clean energy and technology as part of the $369 billion Inflation Reduction Act. Markets and Markets’ forecast arguably could be low if the International Energy Agency is correct in saying the electric vehicle sales will need to account for about 60% or total vehicle sales in 2030 if a trajectory to net zero by 2050 will be established. With these considerations, some light is shed on why regulators and companies alike are moving with a purpose to secure rare earth oxides.

Ucore Rare Metals Inc. (TSX.V: UCU) (OTCQX: UURAF) isn’t a newcomer to the space; it has been an instrumental part of the rare earth market for more than 15 years, developing technology to disrupt the legacy status quo. With a supply crunch in the balance, Ucore and its proprietary tech is well positioned to offer a solution for establishing an independent supply chain of REEs for North American manufacturers. The company has taken a savvy approach, differentiating itself from others in the metals market by focusing on processing materials, a business model that entails higher margins while avoiding risks associated with large CAPEX requirements.

A watershed moment is imminent for Ucore. The company is commissioning a commercial demonstration plant in Kingston, Ontario, to showcase RapidSX(TM), its exclusive metals separation technology that is highly differentiated from anything today and superior in several ways to Chinese technology currently feeding the entire market. The demonstration plant is the beginning of a longer-term strategy that includes constructing a scaled-up plant to supply REE material for customers throughout North America. Ucore is working with companies outside of China that can supply rare earth mixed concentrates, in addition to collaborating with original equipment auto manufacturers that need product for next-generation vehicles.

Even more promising, the U.S. government has discovered RapidSX (“SX” is short for “solvent extraction”) and wants a closer look at what Ucore might be able to do to help the nation meet sustainability goals.

DoD Ponies Up $4 Million for a Closer Look

On June 6, 2023, Ucore announced that the U.S. Army Contracting Command – Orlando, part of the U.S. Department of Defense (“DoD”), awarded the company a $4 million contact. Working with the DoD represents a tremendous opportunity. First, the DoD has one of the largest budgets of any U.S. government agency, and its contracts often span multiple years, providing a reliable, long-term income stream. Second, working with the DoD can often lead to a company becoming a preferred vendor or supplier. This opens the door to further contracts and can enhance a company’s reputation in the marketplace. Third, contracts with the DoD can spur innovation. Many technologies that originated in defense contracts have later found commercial applications, opening new markets and opportunities.

The purpose of the recent contract is to assist the government in understanding Ucore’s RapidSX technology and how it could be useful in creating domestic rare earth processing plants to deliver a sustainable, high-grade source of the critical minerals in the near term. The contract is evidence of the government’s motivation to support innovation in a bid to shift away from Chinese goods while synchronously supporting the U.S. economy.

Equally intriguing for future potential, the contract stipulates that upon successful completion of the initial project, a follow-on production award could be awarded to Ucore in order to further support Ucore’s REE separation capabilities in North America.

To meet the number of technical requirements for the initial project, Ucore will employ its demonstration plant in Canada. The cash influx will allow the plant to operate for extended periods of nearly continuous operation, allowing the company to prove its rare earth separation processing capacity is more efficient than conventional solvent extraction as well as increase RapidSX technology’s readiness level, among other things.

Ucore chair and CEO Pat Ryan believes RapidSX is one of the West’s most compelling rare-earth-supply chain business models. “This U.S.-DoD project will allow us to demonstrate the RapidSX technology platform for rare earth element separation and will include original equipment manufacturers’ qualification trials in coordination with our commercial development activities at the company’s planned Louisiana SMC (strategic metal complex),” said Ryan. “The rare earth element processing opportunity afforded Ucore through this award is pivotal as the company continues to seek out and collaborate with like-minded upstream and downstream partners as part of a Western rare-earth-element supply chain solution.”

RapidSX Is Simply Better

Ucore now has a golden opportunity to show the DoD that RapidSX is a potential game changer, a paradigm shift away from China’s traditional metal separation tech. With the attention of arguably one of the most influential organizations in the world, Ucore will showcase not only the efficiency of RapidSX but also that the same equipment can separate both heavy and light rare earths, an industry first.

The importance of this takes a little understanding of what REEs are and the difference between heavy and light types. REEs are a group of 17 metallic elements on the periodic table, which include the 15 lanthanides (elements 57 through 71) as well as scandium and yttrium. The elements are typically divided into two categories, light and heavy, based on their atomic number and specific gravity. Light REEs include elements from lanthanum to europium on the periodic table and are used in products such as batteries, smartphones and fluorescent lamps. Heavy REEs, which include elements from gadolinium to lutetium, plus yttrium, are used in high-performance magnets, lasers, and certain defense and medical applications.

Four of the REEs are critical inputs to rare earth permanent magnets. These four elements must be separated from the others in order for their unique properties to be captured. However, effectively isolating these metals has proved uniquely challenging for engineers and scientists owing to the similar chemical and physical properties shared by all REEs. The minimal differences in atomic radii and ionic charge among the REEs complicate the separation process, a circle that Ucore has been able to square.

RapidSX: A Multitude of Benefits

Efficiently separating light and heavy REEs using the same equipment clearly differentiates RapidSX, but that is only one of the benefits of the technology. Remember that a key driver of demand for this process is concern for the environment. RapidSX is also better for the planet than conventional extraction techniques because it doesn’t generate the high volumes of toxic waste that other approaches do.

Moreover, the carbon footprint of RapidSX is much smaller than other metal separation technologies. It also uses less power, and 100% of the solvents are recycled. In aggregate, these technological advancements westernize a process that creates an opportunity for Ucore to effect an environmentally safe and economically robust business model.

If That Wasn’t Enough

Scalability is a significant part of the advantages of RapidSX. Ucore will demonstrate that its construction designs are capable of processing large amounts of feedstock continuously. The demonstration plant in Ontario will provide a captivating glimpse of what is coming at the planned complex in Louisiana.

Processing at the SMC is targeted at 2,000 metric tons of rare earth oxides by the end of 2024, with intentions to increase processing to 5,000 metric tons within two years. Ucore management believes that funding of the SMC will be aided by government incentives in addition to off-take agreements from major manufacturers looking to secure future supply.

All of this aligns with the final primary purpose of the $4 million DoD contract. Along with all the other benefits, Ucore will provide the DoD with a techno-economic analysis of RapidSX versus conventional solvent extraction.

Looking to Make a Difference

Ideally positioned for significant growth in a key space, Ucore could be a key player in efforts to supply products essential to North American independence. And Ucore is joined by others who are looking to make a difference, whether that is in strengthening the domestic supply chain or finding sustainability solutions.

Tesla Inc. (NASDAQ: TSLA) believes that “the future is sustainable” and is committed to building a world powered by solar energy, running on batteries and transported by electric vehicles. Last month, the company broke ground on an in-house lithium refinery, located in Texas. This refinery is critical to the company’s mission to accelerate the world’s transition to sustainable energy and represents Tesla’s efforts to aggressively increase the supply of battery-grade lithium hydroxide available in North America.

General Electric Company (NYSE: GE) is committed to advancing the future of energy. The company’s energy expertise spans from renewable wind energy to remission-reducing natural gas as well as physical and digital solutions to modernize the grid that connects it all. The company just announced that Grid Solutions, an integral part of the GE Vernova portfolio of energy businesses, was awarded a contract to supply 380 kV T155 gas-insulated substations (“GIS”) for the world’s largest utility-scale hydrogen plant to be powered entirely by renewable energy. The mega plant will be located in Oxagon, a planned smart city in northwestern Saudi Arabia.

General Motors Company (NYSE: GM) is focused on advancing an all-electric future that is inclusive and accessible to all. At the heart of this strategy is GM’s Ultium battery platform, which will power everything from mass-market to high-performance vehicles. Last week the company announced the second phase of its Ultium Cathode Active Material (“CAM”) joint venture with POSCO Future M. The partnership is designed to increase production capacity of CAM in North America and integrate precursor materials production. Currently, CAM processing is highly concentrated in Asia.

Ford Motor Company (NYSE: F) is working to build a better world, where every person is free to move and pursue their dreams. As part of that mission, the company announced the formation of the Virtual Power Plant Partnership (“VP3”) earlier this year. The partnership is a coalition led by the Rocky Mountain Institute (“RMI”) aimed to scale the market for virtual power plants to help advance affordable, reliable electric sector decarbonization and support grid resiliency. “Electric vehicles are introducing entirely new opportunities for consumers and businesses alike, creating a greater need for sustainable energy solutions to responsibly power our connected lifestyles,” said Bill Crider, Ford’s head of global charging and energy services.

For more information about Ucore Rare Metals, please visit Ucore Rare Metals.

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