Name the commodity, we’re out – A seismic shift in how governments understand the strategic imperative of rare earths

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By Adam Pankratz

Rare earth metals are perhaps the most poorly named of any material. Despite their name, they are not rare at all with some, like cerium, more plentiful than copper. The 17 elements that comprise the group are also all around us everyday in the products we use. Familiarity can breed disinterest, and so it is with rare earths. However, we ignore their importance at our peril. Covid-19 related supply chain shocks and a changing geopolitical world have revealed key vulnerabilities for North America and Europe related to rare earth metals. This realization presents an opportunity of governments to adjust course and for investors to enter a growing materials space.

Currently China produces over 60% of the rare earths that are used in the products we consume. Indeed, the United States accounts for only 15% of world production, despite the seemingly endless uses for these materials. The reader can take a moment to look up from this article and note the myriad objects around them which contain rare earths: phones, tablets, TVs, cars and lightbulbs to name a few of the most common. Further applications include healthcare and defence. To recognize this is to recognize that the West is highly reliant on other – potentially unfriendly – countries for many products we take for granted as well as our critical infrastructure.

Russia’s invasion of Ukraine has awoken even the most somnambulant governments and citizens to some harsh realities about the world and where key commodities come from. Germany is in many ways impotent against Russian aggression because 50% of their gas flows via the Nordstream pipeline under the Baltic from Russia. To push back too assertively risks the gas being cut resulting in a societal shut down and Germany homes plunged into darkness and cold. The geopolitical implications are now impossible to ignore.

Also increasingly difficult to ignore is what Jeff Currie, Global Head of Commodities Research at Goldman Sachs, calls our “molecule crisis.” Years of structural underinvestment in everything from oil and gas, to mining and other extraction industries has resulted in simple lack of supply. “Name the commodity, we’re out,” is the thrust of his message.

Alarms bells should be sounding in every western government about our need to develop locally sourced critical commodities like rare earths. This is a geopolitical as well as environmental imperative according to Drew Horn, CEO of Greenmet, a finance and development company focused on rare earths in the United States. Mr. Horn highlights the danger of US military currently relying on China for metals to build the new F-35 fighter jets and the paucity of controls on how these minerals are extracted. “Buyers need reliability, transparency and accountability in the source of their materials nowadays,” he says. Continuing, he adds “The US and Canada have the highest ESG standards and best practices for responsible extraction of materials like rare earths. We need to support homegrown projects that will benefit our strategic position and are developed in an environmentally responsible manner.”

Though prices for most commodities are rising, government support for rare earths mining will likely be crucial in their early development. Dysprosium and cerium don’t carry the cache of gold for most investors and profit margins tend to be lower. As a result, economies of scale are essential for the economic viability of rare earth mines. Historically, these high initial capital requirements – a difficulty for all mines – combined with an unsupportive regulatory environment and cheap supply from abroad were the reasons for the lack of rare earth mines in US and Canada. New consumer awareness is leading to demand for more sustainably mined products and resulting in the huge opportunity that Mr. Horn and others see in the market.

Governments too, are changing their approach. The United States’ decision to build and maintain a strategic pile of dysprosium may not have been front page news but marks a seismic shift in how governments understand the strategic imperative of rare earths, according to Mr. Horn.

We in Canada should be looking to this opportunity as well. Our natural resource wealth, combined with our stringent environmental standards make Canada a very attractive jurisdiction in which to mine. In the years to come and as the world moves towards a bi- or tri-polar geopolitical model, reliable supply of materials from allies will become ever more important. Further, consumers demand for responsibly extracted resources will only rise. It is into this context that pioneers and champions of rare earth mining like Drew Horn are stepping. The stars are aligned for a marriage of politics, environmental stewardship and investor return in a new a burgeoning mining space.


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