[ferro-alloys.com]ASX-listed mine developer Hexagon Energy Materials is in talks with companies in Europe and the Gulf Region in a quest for a strategic partner to develop a solvent extraction plant technology to process rare earths in Canada, CEO Michael Rosenstreich told S&P Global Platts Sept. 3.

A transaction may now be "very close", with news expected before the end of September, he said.

Hexagon has an option to acquire a 49% interest in the "RapidSX" technology for rare earth element separation -- initially developed by Canada's Innovation Metals Corporation, which is developing a commercial demonstration plant in Kingston, Ontario -- with a capacity of 8-9 mt/month of REE including neodymium, praesidium, dysprosium, terbium and europium, Rosenstreich said.

The option to acquire 49% of the venture is priced at around $2 million and expires in October. Exercising the option will give exclusive rights to the technology: Rosenstreich claims that having a patented technology can lead to lower costs.

The Rapid SX technology, which uses a smaller number of mixer units than a conventional plant, is said to require lower capital costs than a traditional SX plant. Hexagon may raise capital in the market if its planned partnership goes ahead, he said.

Demand for REEs -- used in magnets in motors for electric vehicles and in electronic goods including smartphones -- was expected pre-pandemic to triple over the next five years, Rosenstreich said.

"But now, with stimulus, we're in the exuberant sphere," he said, noting that nations including the US and Germany have substantially increased subsidies to the EVs sector, suggesting demand will grow more rapidly than was expected last year.

"One established commentator [Adamas Intelligence, August 2020] is talking about a 5-fold in crease in NdPr demand and a 6-10% CAGR on prices over the next 10 years."

"EVs were discretionary expenditure: now they make economic sense," Rosenstreich said. "COVID has brought an opportunity to shake up policies and realign them to a low-carbon transition. As the saying goes: Don't waste a crisis!"

Opaque market

Rosenstreich described the rare earths market as "opaque", mainly because it is dominated by China, producer and consumer of around 85% of rare earth oxides and 95% of rare earth permanent magnets, in what he described as "an example of extreme supply chain concentration for a highly strategic and critical material."

According to the mine developer, supply diversification is needed to avoid extreme price volatility such as was seen when China curbed REE exports in 2011.

The rare earths oxide market is put at around 160,000-180,000 mt/year. A new source of production could be enabled by new technology such as RapidSX for REE, to set up "a cost-effective alternative to supplies outside China, allowing companies such as Tesla or Apple to diversify their supply chains," Rosenstreich said.

Currently Australia's Lynas Corp. accounts for most REE production outside China at approximately 14% of supply.

The development of IMC's RapidSX pilot plant for rare earths has already been supported by $1.8 million funding by the US government.

During the COVID-19 pandemic, the REE market appears to have recovered from an initial decline and now has a positive outlook, though lacking in liquidity, according to Rosenstreich.

Hexagon is currently also exploring for gold and nickel in Western Australia, where it also owns significant graphite resources.

(S&P Global Platts)

• [Editor:王可]