Mon | May 1, 2017

Rare-earth project not dead

Published:Monday | December 15, 2014 | 12:00 AMAllan Brooks

In response to recent requests for an update on the rare-earth minerals project, the Ministry of Science, Technology, Energy and Mining (MSTEM) will once again seek to clarify the issues and concerns raised and use the opportunity to invite feedback, suggestions and recommendations to this and any policy measures being promulgated or implemented by the ministry.

Jamaica's desire to gain maximum advantage from the sustainable exploitation of its mineral resources remains a critical policy objective of the Government of Jamaica. This commitment has been reiterated on many occasions by Minister of Science, Technology, Energy and Mining Phillip Paulwell, particularly since the recent decision to suspend the red-mud beneficiation-based (rare-earth elements) project in Jamaica.

A state-of-the-art pilot facility developed through a partnership between the Japanese company, Nippon Light Metal, and the Jamaica Bauxite Institute (JBI) was designed to explore the profitable extraction of rare-earth minerals from bauxite waste.

The pilot plant was totally financed by a US$5-million (approximately J$560-million) investment by the Japanese company and was completed earlier this year. Nippon Light Metals was also responsible for operating costs.

Under the agreement, any rare-earth elements produced during the pilot phase of the project would have been jointly owned by Jamaica and the Japanese company. Negotiations for commercialisation were also expected to occur at a later date.

However, because of unfavourable market conditions, both parties have agreed to suspend the process. In October, a termination agreement was signed by both parties to formally mark the conclusion of the pilot project and facilitate the transfer of the plant's full ownership to the JBI.

When the project was conceived just over a year ago, Jamaica's estimated 100 million tonnes of red mud was envisioned to contain viable levels of several rare-earth elements. Importantly also, the prices of these elements at the time ranged from US$6.50/kg to US$7,000/kg, with strong indications that demand and geopolitical factors could push the costs of these strategic minerals even higher.

China is the world's main supplier of rare-earth elements, which are minerals that play a critical role in making products ranging from basic communication devices to high-tech military weaponry. In recent years (in 2010), China significantly reduced its production and export of these minerals, officially citing resource depletion and environmental concerns as the reasons for restriction of its rare-earth mineral production.

wto rules breached

Last year, the World Trade Organization (WTO) evaluated China's rare-earth exports after the US, the European Union and Japan complained about the curtailment of Chinese sales of the elements. In March 2014, the WTO dispute-settlement panel found that China's restrictions breached WTO rules.

In August, the Geneva-based WTO's appellate panel overruled China's appeal, effectively opening up the market.

Meanwhile, in an attempt to satisfy their own demand, many countries have sought to find alternative sources. The relative success of those efforts, which coincided with the WTO's removal of restrictions on Chinese exports, improved global accessibility to the elements and greater security of supplies, resulting in the plummeting of prices.

Rare-earth minerals are subject to wild fluctuation in prices and are not "exchange-traded" in the same way that precious or non-ferrous metals are traded. Instead, they are sold on the private market, which makes their prices difficult to monitor and track. Also, the 17 most in-demand elements are not usually sold in their pure form, but instead are distributed in mixtures of varying purity. Pricing can, therefore, vary based on the quantity and quality required by the end user's application.

Despite the vagaries of the rare-metals market, this does not mean the death of the Jamaican project. Jamaica now has full ownership of the Rare-Earth Element Plant, following a formal handover of the facility to the JBI by Nippon Light Metal Holding Company Limited (NLM) in October 2014.

Over the next two years, JBI will continue to receive technical expertise in bauxite red-mud mineral extraction from Nippon Light. A collaboration agreement has also been formalised to accommodate a two-year research and development programme, and a patent application agreement that will protect the JBI's and Nippon Light's interests in the project.

JBI, on behalf of the Government, will have 50 per cent ownership and Nippon Light Metals will own the other 50 per cent of patent rights of the new technologies. In addition, the pilot facility can be used to conduct a wide range of related experiments.

Among other things, the pilot plant experiment demonstrated how to effectively neutralise the alkaline nature of the red mud, which has been a major environmental concern. The project can be placed back on track as soon as the long-term market conditions improve.

n Allan Brooks is a communication specialist in MSTEM. Email feedback to columns@gleanerjm.com and abrooks@mstem.gov.jm.