The US Department of Defense is offering $1.25 billion in conditional loans to support the construction of rare earth processing facilities in the US.
Phoenix Tailings is set to receive a $500 million loan for a facility that would produce rare earth metals. Energy Fuels is in line for $725 million to help scale up rare earth oxide separation and metallization. The Pentagon hopes the facilities will reduce US dependence on China for the critical minerals.
Rare earth elements are needed for magnets used in defense applications such as jet engines, electric drone motors, and radar systems. To make them, mixtures of rare earths from mined ore must be separated into individual oxides and reduced to metals. The metals are then alloyed with other, more readily available metals to form magnets.
About 90% of separation and metallization steps are carried out in China, according to a 2022 US Department of Commerce Report (PDF). Over the past year, China has implemented several restrictions that have slowed exports of rare earth products, sparking national security concerns in the US.
The US has been throwing significant support behind new rare earth processing projects to ensure that the country’s military and technology industries have access to the materials. That support includes an investment in the California-based rare earth miner MP Materials, a $1.3 billion loan for USA Rare Earth, and a supply agreement with Lynas Rare Earths, which has a mine in Australia and a separation plant in Malaysia.
Plans for rare earth metallization projects outside of China are also moving forward. The USA Rare Earth subsidiary Less Common Metals is planning a metallization facility in France, and Australian Strategic Materials operates one in South Korea.
Last year, Phoenix Tailings opened a metallization facility in Exeter, Massachusetts, designed to produce 200 metric tons (t) per year of neodymium-praseodymium metals and dysprosium-iron alloys. The company has said it could scale up to more than 1,000 t per year, enough for all US defense applications. Phoenix Tailings hopes to expand production to include rare earths such as terbium, samarium, and gadolinium. Phoenix Tailings is also developing technology to separate mixtures of rare earths into oxides.
The new facility supported by the Department of Defense is expected to cost about $1 billion; the additional funding will come from private sources. Phoenix Tailings says the facility will be able to process a variety of rare earth feedstocks, including mined ore, manufacturing scrap, and recycled magnets into oxides and metals. It is slated to open in 2028.
Energy Fuels uses solvent extraction to produce uranium in San Juan County, Utah, and is developing a similar process for rare earth separation. Energy Fuels plans to extract the rare earths from monazite. The mineral has posed a challenge for other rare earth miners because it contains uranium and thorium, but Energy Fuels argues that it has the infrastructure and capabilities to handle radioactive by-products.
In January, Energy Fuels announced plans to acquire the metallization specialist Australian Strategic Minerals. The company says part of the Department of Defense loan will be used to open a metallization facility in the US. Both Energy Fuels and Phoenix Tailings must fulfill some financial and technical due diligence requirements to close the loans.
David Riley, a rare earth industry analyst with the intelligence firm Wood Mackenzie, says it will be tough for firms to scale up both rare earth separation and metallization technologies at the same time.
Energy Fuels only recently started moving into the rare earth industry and has yet to complete the acquisition of Australian Strategic Minerals. Riley says Phoenix Tailings’ Massachusetts facility demonstrates that the firm has the technical capability to reduce oxides into metals, but its separation technology appears to be less mature. Dealing with a wide range of feedstocks will add to the complexity, Riley notes.
“The project looks challenging,” he says. “It’s a lot of different elements to scale up together.”
