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Australian energy materials business focused on downstream rare earths and graphite processing to service high-growth E-mobility and renewable energy sectors

Rare Earths

Rare earth elements (REEs) are essential, frequently non-substitutable components of the rapidly growing clean energy sector, in electric vehicles and wind turbines, used in advanced technologies, medical imaging devices, catalytic reactors and various military applications.

© 2020 Hexagon Energy Materials Ltd

Along with the growing market of green energy to enable the transition to low-carbon economies over the next decades, global demand for REEs is forecast to increase significantly putting increasing pressure on the current REE supply chain. The current supply chain is highly concentrated – with China dominating approximately 90% of the REE materials supply, presenting a high level of supply risk for these critical and strategic materials.

What are REEs?

Rare earth elements refers to:

  • the 15 elements of the lanthanide series – lanthanum (La), cerium (Ce), praseodymium (Pr), neodymium (Nd), promethium (Pm)*, samarium (Sm), europium (Eu), gadolinium (Gd), terbium (Tb), dysprosium (Dy), holmium (Ho), erbium (Er), thulium (Tm), ytterbium (Yb) and lutetium (Lu); and yttrium (Y) and scandium (Sc).

© 2020 Hexagon Energy Materials Ltd

When reporting on REE, it is common to use broad subdivisions into Light Rare Earth Elements (LREE), Heavy Rare Earth Elements (HREE) and, occasionally, Medium Rare Earth Elements (MREE).

*Note – Hexagon does not include promethium (Atomic Number 61) in its tabulation as this is an unstable radioactive decay product.

Rare earths are not particularly rare in the earth’s crust. However, they are referred to as ‘rare’ because it is not common for them to occur in economic concentrations and this geochemical aspect, based on their close-positioning on the Periodic Table, is important in the challenges of downstream processing referred to below, namely how to separate elements with such similar chemical and physical properties.

REEs have unique catalytic, metallurgical, nuclear, electrical, magnetic and luminescent properties.

What are REEs used for

REE are utilised in many domestic, medical, industrial and strategic applications because of their unique and often non-substitutable physio-chemical properties.

Hexagon is interested in the utilisation of certain REEs in magnets and super magnets – which it regards as a major growth segment, but REEs are also widely used in metal alloys, electronic and computing equipment, batteries, catalytic converters, petroleum refining, medical imaging, colouring agents in glass and ceramics, phosphors, lasers and special glass.

Source: Adamas Intelligence

Whilst REEs have numerous applications, commercially, Hexagons business case is driven by the ‘magnet metals’ which are becoming increasingly important by both volume and value. For example: neodymium and praseodymium are used in high-power magnets; dysprosium, samarium, and terbium in high-temperature magnets and holmium is used in very-high-power magnets.

REE Supply Chain

In Hexagon’s view, the term ‘supply chain’ when applied to REE is a misnomer given the dominance of China and way the industry is structured there, namely consisting of significant State ownership, subsidies, cross-ownership, transfer-pricing arrangements etc.

With China processing over 85% of the global supply of REE there is a clear and strategic need to create greater supply chain diversity and transparency in the global REE materials processing sector. REEs are vital components in transitioning to low-carbon economies via e-mobility and renewable energy generation as well as strategic non-substitutable inputs into a variety of military applications. This is why supply chain diversification is such a strategic issue for governments around the world who do not want to be dependent on China for REEs.

Notwithstanding this Company view, an idealised, highly simplified supply chain relating to rare earth magnets is presented below.

© 2020 Hexagon Energy Materials Ltd

A feature of REE processing is that it is complex due to the host mineralogy’s in the primary ore and due to the physical and chemical similarities of the 17 REEs which makes separation difficult.

Conventional counter-current solvent extraction (SX) is used for virtually all REE separation. SX for REE separation is highly capital intensive and China already has extensive separation infrastructure and capacity further reinforcing its market dominance for processing domestically sourced concentrates but also giving it the market power to purchase and import concentrates from overseas – such as its concentrate imports from the USA, Australia and SE Asian sources.

Hexagon is aiming to reduce the capital cost ‘barrier’ for REE separation for existing and emerging products to capture additional value. In a staged manner this will be instrumental in diversifying the REE materials supply chain.