Canadian Rare Earth Metals Gain Attention As China Threatens To Curb Exports

Canadian mining companies focused on rare earth metals believe their time has finally come.

As the U.S.-China trade war drags on, and Beijing threatens to withhold exports of rare earth metals used to power cell phones, electric vehicles, rechargeable batteries and medical devices, a growing number of Canadian mining companies are stepping up to fill demand. China currently produces close to 90% of the global supply of rare earth metals such as lithium, tin, indium, tantalum, niobium and zirconium.

But China is now threatening to restrict exports, part of its response to American tariffs, and that could leave the world scrambling. China restricted exports of rare earth metals in 2010, during another trade dispute with the U.S. Back then, China reduced export quotas on rare earth metals by 40% and sent prices soaring.

The U.S. and other countries are responding to China’s latest threats and looking to Canada to help lessen their reliance on Asia for rare earth metals. In August, U.S. President Donald Trump issued an Executive Order to encourage the creation of a North American rare earth supply chain to reduce reliance on China.

Stating that rare earth materials are "essential to national defense," Trump issued the order under a provision of the Defense Production Act of 1950: a broad law that authorizes the president to allocate materials and other services to promote and support American defense.

Given rare earth metals significance to military and industrial projects, some countries like the United States and the member states of the European Union have suggested that cultivating alternate sources – and even prohibiting consumption of rare earth metals from China – is a matter of great importance, and even national security. A recent report from Frost & Sullivan anticipates that rare earth demand will only increase over the next several years – thanks in part to electric vehicle production and the rise in demand for certain magnets.

Canadian mining companies are well positioned to move into this market. While not a current producer, Canada has one-third of the world’s rare earth deposits, according to Natural Resources Canada. Canada has high concentrations of in-demand rare earths metals that are used in clean-energy applications, notably electric vehicles.

Several projects are now underway across Canada. Avalon Advanced Materials Inc. (T.AVL), based in Toronto, is working with Cheetah Resources Ltd., an Australian investment group, to fast track production at the Nechalacho Project at Thor Lake near Yellowknife, Northwest Territories.

Cheetah Resources has agreed to a $5-million investment in Avalon Advanced Materials Inc.'s Thor Lake project. Avalon Advanced Materials also recently appointed a former executive of Barrick Gold Corporation (T.ABX) to its Board of Directors and is advancing other rare earth metals projects in Nova Scotia and northern Ontario.

Separately, Vancouver-based Medallion Resources Ltd. (V.MDL) has put out a call for third-party proposals to advance development of a North American extraction plant that would recover neodymium and praseodymium from monazite.

The federal government in Ottawa also seems to be paying attention to the potential of Canada’s rare earth metals, with Natural Resources Canada launching a page dedicated to information about Canadian deposits and the companies involved in developing them for extraction.