Canadian miner vies to be major rare-earth supplier – by Pav Jordan (Globe and Mail – April 18, 2012)

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The race is on for mining companies vying to become the world’s next big producers of heavy rare-earth minerals, used to manufacture components for everything from vent fans for jet engines to laser-guided systems for smart bombs.

From hundreds of companies actively exploring for rare-earth deposits, only a handful – including a few Canadian – have made discoveries that could establish them as key suppliers in the quickly evolving market.

The 17 so-called rare-earth elements have been mined for half a century – with most of them coming from the Bayan Obo mining district in China. The minerals had been largely ignored until recent years, when they found their way into technological innovations ranging from smartphones to super-magnets used in wind turbines and automobiles.

Prices for the minerals touched all-time highs after No. 1 producer China tightened export restrictions on rare earths by nearly half in 2010 as it sought to guarantee supplies amid booming demand from its own market, which analysts say could consume all it produces within a decade. The caps were highly criticized by governments in Europe and the United States, which have complained to the World Trade Organization.

“People are trying to get to that position where they can produce and take advantage of the marketplace and that then creates sort of an artificial barrier to entry,” said Jim Forbes, global metals leader at PricewaterhouseCoopers.

Rare-earth elements are split roughly in half into light rare earths and heavy rare earths. The heavy rare earths, which get their name from their relatively heavier atomic weight, are most rare and consequently more expensive than the “lights.”

“There is room in the world for three, maybe four light-rare-earth projects,” said Jon Hykawy, an analyst with Byron Capital Markets in Toronto. “There is room for maybe four or five heavy-rare-earth companies out there, producing up to the 5,000 to 10,000 tonnes per year level,” Mr. Hykawy said. “I hope they realize they are in a race.”

Key producers of the “lights” outside of China include Molycorp Inc., Lynas Corp. and Great Western Minerals Group Ltd., essentially controlling the field of non-Chinese producers.

In the heavy rare earths, one Canadian miner appears closer than most to becoming a major player.

Quest Rare Minerals Ltd. (QRM-T2.10-0.04-1.87%)says its Strange Lake Deposit in Northern Quebec could supply as much as 10 per cent of global demand for rare earths once it is up and running, and as much as 30 percent of demand for the more pricey heavy rare earths.

For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/canadian-miner-vies-to-be-major-rare-earth-supplier/article2405521/