UK rare earth producer pivots to EU and US

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Britain’s only rare earths metal producer is prioritising expansion in the US and EU and putting the brakes on UK growth after Brexit created obstacles for exporting to mainland Europe, the company’s managing director has said.

Among the factors driving the decision by Albert Slot, of Less Common Metals, are the huge subsidies being offered under US president Joe Biden for development of critical mineral supplies.

Slot made the comments after striking an agreement on Monday for rare earth supply from South Africa that aims to reduce western dependence on China for the critical minerals.

“We are basically trying to expand into the European theatre as in the US,” Slot said in an interview. “The Brexit executed by the British didn’t really help in LCM’s industry, meaning that we have to have a foothold in Europe.”

He added that the company had to be close to makers of magnets for new technologies.

“Hence the discussions about expanding into the US and EU,” he said.

Rare earths are a set of 17 elements such as dysprosium, terbium and neodymium that, despite being commonly found in the ground, are complicated to extract and hard to process economically outside of China.

They have been identified as critical minerals by western governments because of their role in electric cars, wind turbines and defence technologies. However, their production currently is heavily dependent on China.

LCM is one of only two companies outside China that can produce rare earth metal and alloys. Alloys are a vital step between the mining and separation of rare earths and their use in the permanent magnets used in motors of electric vehicles, drones and wind turbines.

China accounts for 70 per cent of the mining of rare earth concentrates, according to a report last year by the Centre for European Policy Studies, a think-tank. But the document said China had an even greater stranglehold further down the supply chain, controlling 91 per cent of the refining and alloying stage and 94 per cent of the world’s permanent magnet production.

David Merriman, an analyst at Project Blue, a consultancy specialising in minor metals such as rare earths, pointed out that the only other company outside China with expertise similar to LCM’s was Vietnam Rare Earth. That company is partly owned by Chinese interests.

Several companies are considering developing the capacity to make rare earth minerals into metals in Canada, the US, South Korea and Australia.

In 2021, LCM received government funds to explore the feasibility of setting up a rare earth permanent magnet supply chain in the UK. Such a chain would extend beyond its production site at Ellesmere Port, on Merseyside.

However, Brexit has proved a big obstacle for the company in securing contracts to supply magnet manufacturers within the EU. LCM is consequently seeking to set up a local entity within the single market bloc to meet customer needs there.

To develop further in the UK, Slot added, the company would need more “offtake agreements” — commitments from customers to purchase future volumes of material — from domestic customers.

“Without potential offtake agreements, it’s going to be difficult to put a full-blown supply chain in place in the UK,” Slot said.

He added that there were so far no magnet makers in the UK prepared to sign contracts to buy the company’s rare earth alloys. Such contracts were “almost available” in the US and “readily available” in the EU, he said.

The deal struck on Monday would give LCM a supply of separated rare earths from Rainbow Rare Earths’ Phalaborwa project in South Africa for its international expansion.

While the supply volumes are yet to be finalised, Pete Gardner, chief financial officer of London-listed Rainbow, said that LCM would probably expand production in tranches. Each new tranche would add about 2,000 tonnes annually of alloy production to its capacity. That amount would demand 40 per cent of annual production from Phalaborwa and produce enough metal for motors in less than 700,000 electric vehicles.

Rainbow, which produced its first batch of mixed rare earth sulphate last week, has partnered with K-Technologies to separate the elements in the US state of Florida.

In a separate announcement on Tuesday, Belfast-based Ionic Technologies revealed a new partnership with automaker Ford and LCM, which aims to build a UK rare earth magnet recycling supply chain backed by £2mn of government funding.

The recycled rare earths will be used in Ford’s Halewood transmission plant on Merseyside. The facility will produce the majority of motors for the US automaker’s production in the European market. It will need 600 tonnes a year of magnet raw material to produce drives for almost 500,000 electric vehicles annually by 2026.