EU Policy Makers Urged to Tap into REE Supplies

Rare earth metals in European and Nordic countries have the potential to save the regions’ automobile and electronics industries from uncertain imports and pre-designated quotas.

This message was put forward in April by a panel of geologists at the European Geosciences Union’s annual meeting as members urged policy makers to address the issue of the region’s lack of rare earth element (REE) output.

According to Friedrich Wellmer, former president of Germany’s Geological Survey, while Europe is rich with the REEs used to power batteries and produce magnets, regional leaders have not yet demonstrated the political will to tap into resources effectively. Interestingly, Scandinavia is regarded as the “home of REEs” as many REEs were first discovered in Sweden, including cerium, holmium, lanthanum, scandium, terbium, and thulium.

“It is not that the elements don’t exist in Europe,” said Wellmer, who is now the chairman of sustainable management at the Institute for Advanced Studies in France. “It has become more unacceptable socially to mine them.”

The debate over sources of REEs for both the automobile and electronics sectors has been rife for some time now, with countries reverting to innovative measures in order to ensure supply. Earlier this year Toyota (TSE:7203) announced that it has developed a method to manufacture hybrid and electric vehicles without the use of REEs, while automobile manufacturer Honda (NYSE:HMC) stated that it has developed what is being hailed as the world’s first mass-production rare earth recycling process.

However, analysts are of the impression that such developments are still in their early stages, and as such are not economically viable from a European manufacturing perspective. Many are now calling on Europe to tap into its own rare earth potential to assist manufacturing industries moving forward.

“Europe relies on natural resources whether we like it or not,” said Richard Herrington, a professor of mineralogy at the London Natural History Museum. “It just takes a political or economic crisis to put pressure on European industry. We’re seeing that now.” He added that tapping into abandoned mines in Greece and Albania, along with newly-discovered REE deposits in Finland, would alleviate Europe’s supply needs.

Nick Arndt, a geologist at Joseph Fourier University, stated, “Toyota is getting into partnerships with mining companies,” adding, “[i]t’s not quite clear why European companies are not doing that.”

Earlier this year, Toyota Tshusho (TSE:8015) announced that it was in negotiations regarding a possible joint venture agreement with Matamec Explorations (TSXV:MAT) in relation to the company’s Quebec-based Kipawa project. The agreement is aimed at Toyota buying all the REE output from its Kipawa mine.

European projects

While Europe has not been considered a REE stronghold of late, some explorers are hoping to take advantage of its “undercover” status. Tasman Metals (AMEX:TAS,TSXV:TSM), one of these explorers, was highlighted last week when a Canadian investment bank issued a research report on the junior REE space.

The bank described Tasman as a high-potential exploration company, commenting that it has “one of the highest concentrations of heavy rare earth elements.” Tasman is a Scandinavian-focused explorer with claim holdings in Sweden, Finland, and Norway that are prospective for strategic metals, including REEs.

According to a press release, the company confirmed positive technical and financial results from its Norra Karr heavy REE and zirconium project in Southern Sweden. Highlights include REE recoveries of 80% total rare earth oxide (TREO) concentrate, mixed TREO concentrate production of 6,800 tonnes, including 290 tonnes of dysprosium oxide, 43 tonnes of terbium oxide, 773 tonnes of neodymium oxide, and 2,360 tonnes of yttrium oxide in mixed concentrate form.

“Norra Karr is one of the largest and most economically robust projects amongst its peers, due to the high contribution of the high value critical rare earth elements, the substantial capital and operating cost benefits provided by existing infrastructure, and the simple mineralogy that allows ambient temperature and pressure processing,” said Mark Saxon, Tasman’s president and CEO.

The development of a rare earth deposit in Storkwitz, Germany was announced earlier this year by mining group Deutsche Rohstoff (FWB:DR0). Based on exploration conducted in the mid-1970s, it hosts a historical estimate of 38,000 tons of rare earth and 8,000 tons of niobium. The company is looking to expand on the deposit this spring and will upgrade the historical records to JORC standards.

While the Storkwitz deposit is the only REE deposit currently being developed within Central Europe, there are a number of other explorers developing projects within the greater European region. These include AS Silmet, a rare earth processing company in Estonia that was bought out by Molycorp (NYSE:MCP) in late-2011, as well as Greenland Minerals and Energy (ASX:GGG) which is working on its Kvanefjeld project, a multi-element deposit that it states “includes one of the world’s largest resources of rare earth elements.”

Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article.