Sun | Dec 11, 2016

Depressed rare earth market puts Jamaica's project on hold

Published:Wednesday | July 30, 2014 | 12:00 AM
The site of the Jamaica Rare Earth Elements Pilot Plant at Hope Gardens, St Andrew which was officially opened by Mining Minister Phillip Paulwell on October 23, 2013. - File

Correction & Clarification

A story published, captioned ‘Depressed rare earth market puts Jamaica’s project on hold’, said Nippon and the Jamaican Government spent J$300 million on laboratories and a pilot plant for extraction. A Ministry of Mining official said $600 million has in fact been spent, all borne by the Government’s partner, Japan’s Nippon Light Metals.

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Avia Collinder,
Business Reporter

Japan's Nippon Light Metals, and its Jamaica government partner, who developed a revolutionary process to extract rare earth elements (REE) from the effluent left when bauxite is refined to alumina, are unlikely, at this time, to pump cash into bringing the product to market, given the slump in the price of the commodity.

In the meantime, Nippon and the Jamaica Bauxite Institute (JBI), continue to attempt to refine the technology, which they own 50:50 and for which they have sought patents globally.

"The highly depressed state of the REE (rare earth element) market at this time would not make it a favourable time to make significant investments which would be required," Parris Lyew-Ayee, the JBI's executive director, told Wednesday Business, in emailed responses to questions. "We need to keep monitoring the market as we proceed with our research and development work."

Precisely what commercial development of the project would cost was not disclosed, but nearly two years ago, Nippon spent J$600 million on laboratories and a pilot plant for the extraction.

Rare earth elements are a series of metals, used largely in high-technology and precision equipment and are found only in a few places in the world, primarily China. So, the development of a viable technology to extract the oxides from so-called red mud - usually stored in large ponds around alumina refineries - was a major development for the industry. As such, Nippon's involvement with Jamaica was announced with fanfare by the island's mining and energy minister, Phillip Paulwell.

Paulwell highlighted the fact that rare earth elements sold at up to US$3,500 per kilogram, a price higher than the prevailing cost for a tonne of alumina and multiples of that for raw bauxite.

However, Howard Chin, a Jamaican engineer, has suggested that Paulwell over-sold the project, saying that such prices were not achievable at this time. Most rare earth elements are sold at between US$1 and US$10 on the markets, Chin said.

An official in Paulwell's ministry, who preferred to remain anonymous because he was not authorised to speak on the matter, insisted that Chin "is not saying anything which is different from what we are saying."

Changed international conditions had pushed down prices and slowed down a promising project, this official said.

Japanese and other users of the oxides, he explained, developed interest in finding rare earth elements from alternative sources, and in other forms, when China, which mines 90 per cent of the oxides, placed a ban on their export.

"What they (Japan and South Korea) had to do was shift a lot of their manufacturing to mainland China" the official said.

These market developments caused a spike in the price of rare earth elements and provided the conditions for Nippon's Jamaica project.

Plummeting prices

Subsequently, however, Japan succeeded in securing a ruling from World Trade Organisation against China for unfair trade, forcing Beijing to resume exports. But that was not before other countries with rare earth supplies, including the United States, restarted mines, including some of which had long been closed. The upshot: prices plummeted.

Jamaican officials insist that rather than being dead, the project "is on pause", and explained that geopolitical concerns, such as tensions long-standing tensions between Beijing and Tokyo would likely keep alive Japanese interest in finding alternative sources for the minerals.

In fact, other sources say, the Japanese activity in Jamaica has excited interest in the island's red mud to the point where foreigners have sought to corner supplies by seeking long-term leases over the effluent ponds.

"The red mud ponds are multi-elemental resources, bearing REEs as well as iron, titanium and several other valuable minerals. So it is difficult to put a value on these deposits at this time," Lyew-Ayee said."

avia.collinder@gleanerjm.com