Fundamental Perspectives on the Economic Analysis of Rare Earth Processing from Various Feedstocks

In the mining and minerals sector, new development projects are assessed for economic viability using a standard approach whereby resource and reserve data are evaluated alongside cost and revenue estimates. While this universal approach can be applied for any mined commodity, projects in the rare earth element (REE) sector have unique attributes that merit specific attention, most notably including inconsistent product pricing structures and market entry concerns. For example, the REE pricing used in any individual study may vary considerably from others depending on the data source, the year of study, and the extent of separation and refining included in the assessment. Altogether, these issues can create challenges when analyzing reported economic projections at face value or making comparisons between dissimilar projects. Recognizing these nuances, this chapter seeks to provide a set of economic benchmarks for REE development projects using a fixed REE pricing deck and a common evaluation methodology. Technical and economic data were collected from public disclosures for 42 distinct REE development projects. Of these, 21 were found to be of sufficient maturity to include pro forma cash flow projections suitable for detailed economic analysis. The technical and economic data were then aggregated to identify trends and outliers among the population of development projects. Lastly, these findings were compared against similar economic projections for several unconventional REE resources, including monazite sand, coal refuse, acid mine drainage and seafloor sediments. In summary, the findings show that conventional REE ore deposits vary in grade from approximately 300 ppm to nearly 15% total rare earth oxide (TREO) content; however, the majority of the deposits with viable economic outcomes were between 0.5% and 2% TREO. At the time of their publication, many of these projects reported robust economic outcomes with all 21 showing payback periods (PP) of 7 years or less and net present values (10% discount rate) in the hundreds of millions to billions of dollars. A revised analysis using a lower price deck (i.e., January 2020 market prices) showed less-favorable outcomes, with only 9 of the 21 having a positive calculated gross margin. Similarly, analysis of unconventional resources showed that while the REE resource is vast in most cases (e.g., seafloor sediment and coal refuse), the contained values can be quite low, but still within the range of conventional deposits. Overall, the findings of this assessment further emphasize the need for low cost production and innovative technological advances for both conventional and unconventional resources.