What Happened on the Road to Rare Earth Success? (How did the yellow brick road end up as fool’s gold?)

"This paper looks at what has happened in the past decade in the rare earth industry, particularly for those companies outside China trying to develop alternative projects to the Chinese dominated supply chain. The rare earth industry has gone through a metamorphosis over the past decade. The industry was basically unknown outside China until overnight it became the next hot topic on the financial streets of Canada and Australia. Suddenly various junior miners shifted from uranium and other out-of-favor commodities to rare earths as funds were easy to access from an investment community that did not understand the complexities of the space. The initial funding was done on traditional junior mining metrics of grade and deposit size. This has morphed over time to:1) Lights versus heavies2) Making a concentrate3) The importance of separation4) Off-take agreementsAt the peak of the market frenzy certain flagship operations were built using the “Not Made in China” moniker. Unfortunately certain errors were made during implementation, which are finally coming to the surface and making the rest of the pack wondering what will happen next. A review and update of some of the mistakes made and lessons learned will be discussed.BACKGROUNDAbout ten years ago awareness started to form around the rare earth industry and various groups recognized that because of the closure of Molycorp, Mountain Pass, and the dominance of China, there was a risk of uncertainty of reliable supply. This was not news for those active in the industry like Rhodia (now Solvay), the Japanese, South Koreans and other key consumers but to others it was like a light went on and rare earths became the new “.com” trend for investment banks, investors and some mining companies looking for the next hot topic.In the late 1990’s Molycorp accounted for around 20-25% of the world’s supply of rare earths, mostly lights (La, Ce, Pr and Nd), with small amounts of heavies from other sources. Then environmental issues forced the closure of the operation at Mountain Pass. Within six months China had increased production to plug the gap in supply. Around that time China was developing a strategy to leverage their position in rare earths and implemented a series of regulations to increase the value added component of rare earths inside China."