Leading Edge Materials CEO Mark Saxon joined the Investing News Network to discuss the future of the electric vehicle market.
According to Saxon, high strength permanent magnets manufactured from rare earth elements (REEs) are commonly used in electric vehicles (EVs). The REE permanent magnets enable weight reduction which delivers a positive effect on battery performance. Saxon believes that the lack of supply of REEs in Europe could cause future problems for the automotive and wind energy industries, as Chinese sourced REEs have an environmental cost that is not consistent with customer expectations.
In order to serve the European market with rare earth elements, Leading Edge is progressing the mining lease permitting of its Norra Kärr REE project in Sweden. The project was drilled out in 2015 in order to complete a resource calculation, conduct metallurgical test work and complete a prefeasibility study.
Below is a transcript of our interview with Leading Edge CEO Mark Saxon. It has been edited for clarity and brevity.
Investing News Network: Do you believe that the current rare earth element (REE) supply pressure could affect EV roll-out?
Leading Edge CEO Mark Saxon: When considering the use of REEs in electric vehicles, it is high strength permanent magnets that play an important role. High strength magnets use the REEs neodymium, praseodymium, dysprosium and, to a lesser degree, terbium. Despite a significant research and development effort at the start of this decade to reduce REEs in vehicles, magnets remain critical in EVs due to the role they play in weight reduction, which has a major effect on battery performance. Between 80 percent and 90 percent of EVs today incorporate high strength REE magnets in their design.
There is a broad range of raw material supply pressures, including REEs, that may slow EV roll out, regardless of the booming demand. REE mining and processing is extremely concentrated within China, and the current tariff and trade dispute is exposing a vulnerability for auto manufacturers in Europe and the US. The automotive industry needs to engage quickly with their entire raw materials supply chain as we sit on the verge of massive demand growth for a range of mined materials that have previously only been required in small volumes.
INN: How will REE supply security affect Europe?
MS: While REE production is a relatively small industry, their unusual and specific properties mean they are difficult to substitute away from without massive and costly re-engineering. At present, Europe does not produce any REEs from primary mining, with a very small amount captured through the recycling of lightening products.
The European Commission is well aware of the importance of REEs in the transition to green energy and electromobility. The Joint Research Centre (JRC) has regularly tracked material flows and identifies a threat to both the automotive and wind energy industries in Europe. Both industries are critical to growth, competitiveness and energy independence in Europe and a loss of access to secure REE or REE-bearing magnet supply would be highly damaging.
While the current conversation is around tariffs, trade and supply security, a longer-term issue for REEs is the sustainability and environmental impact of current production. It has long been recognized that Chinese mining practices have created an environmental legacy that needs rapid mitigation. In light of the increased demand for REEs from wind energy and EVs, and a greatly increased customer focus on responsible sourcing, customers of REEs need to transition to better managed, traceable and much lower impact sources.
Social and environmentally sustainable and traceable sourcing of battery and magnet materials is a very important discussion within Europe. Local sourcing is identified as a partial solution to reduce and better manage the global impact of European battery and EV raw material demands.
INN: What role does Europe currently play in REE separation?
MS: Europe has played a leading role in the REE industry since they were first discovered and separated in Sweden in the late 18th century. Today, REE processing and separation is undertaken in Estonia, Norway and France, while Austria has a long-standing competence in REE materials and innovation.
Both the European Commission and member states have funded a variety of projects to develop REE supply, knowledge and competence in Europe. Wide-reaching studies entitled EURARE and ERECON brought together the supply chain and identified that, while Europe has downstream separation and value add capacity all the way to magnet making, there has not been investment in raw material mining.
INN: How will recent supply security and trade issues affect Leading Edge’s plans to provide Europe with REE metals?
MS: As REE markets have been subdued for a number of years, Leading Edge Materials has been progressing at a relatively modest pace with the Norra Kärr REE project in Sweden, with a greater focus on the company’s other assets. Following the trade dispute and the large jump in the price of dysprosium over the past month, Leading Edge Materials has received very strong interest from within Europe and elsewhere regarding future sourcing of REEs. We are now reassessing priorities of various projects within our portfolio.
The Norra Kärr deposit is well known to be highly significant within Europe, able to deliver a secure long-term source of rare earth elements, zirconium, hafnium and niobium to European renewable energy and electric vehicle industries. The project was drilled out, a resource calculated, metallurgical test work undertaken and a prefeasibility study was completed in 2015.
Norra Kärr is one of only two NI 43-101 compliant REE resources on the European mainland, and therefore holds a very special position if Europe is to progress towards supply security in REEs. Geologically, it is a peralkaline nepheline syenite intrusion that covers 450 meters by 1,500 meters in area, with the deepest extents exceeding 350 meters. Mineralogical studies show nearly all of the REE in the deposit is found within the mineral eudialyte, which is enriched in heavy REEs, in particular the magnet metal dysprosium.
A mining lease was granted for the project in 2013, but a 2016 decision by the Supreme Administrative Court in Sweden determined that the permitting authority had not considered all issues before the mining lease was granted. As a result, the Norra Kärr mining lease, along with a range of other mining leases in Sweden, returned to application status.
Leading Edge Materials continues to work with the Swedish permitting authorities to provide additional information on and around the Norra Kärr mine lease area. The deposit is 100 percent owned by the company on a granted exploration license, while the permitting is being resolved. Although the permitting process has slowed our research at Norra Kärr, we have made significant advances with regard to the development of co-products utilizing nepheline and feldspar, while improving the processing economics for REE extraction.
INN: What can you share with us regarding the recent funding milestone achieved by Northvolt for its battery facility in Sweden?
MS: Swedish company Northvolt has recently taken a great step forward, securing the next round of funding for their planned lithium-ion battery factory Northvolt Ett, to be built in Skellefteå, Sweden. The 886 million euros funding round was led by the Volkswagen Group (ETR:VOW3) and Goldman Sachs (NYSE:GS), alongside the BMW Group (ETR:BMW), AMF, Folksam Group and IMAS Foundation, while a recent 350 million euros loan was also provided by the European Investment Bank. Strength of the future European battery market is confirmed by Northvolt reporting 13 billion euros in battery pre-sales through to 2030.
Stage 1, which has 16 gigawatt hours of production, at Northvolt Ett is planned for 2021, with Northvolt aiming to build the world’s greenest battery cell with a minimal carbon footprint and a high proportion of locally sourced materials. Based on typical industry figures, the Stage 1 facility will require between 14,000 and 18,000 tonnes of blended natural and synthetic graphite anode per year.
While not impacting our plans for REEs, Leading Edge Materials views these developments as very positive for the work underway at our Woxna graphite mine in Sweden. As a lithium-ion battery is around 16 percent graphite, we are pleased to see the excellent support for a potential future local customer from some of the world’s strongest automotive brands.
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