Avalon Rare Metals, one of the prime contenders for near-term heavy rare earth (REO) production outside of China, has suffered a major setback. This week, the company reported a six month delay in the delivery of its feasibility study (final study on the economic viability of the project on the basis of which a production decision is made). Avalon says it needs more time to complete its metallurgical studies. These studies show the ease with which the rare earth elements can be extracted from the minerals they are contained in. The delay implies moving back the intended production start-up a whole year, allowing the competition to close the gap with front-runner Avalon.
Metallurgy is the main hurdle for all REO hopefuls, and it has impacted most of the advanced projects so far. Lynas took over 10 years to complete its flowsheet. Alkane has been at it for 7 years. Arafura’s predicament is unclear, having failed to provide evidence of a successfully tested flowsheet for years now. Even Quest, a much earlier stage project, has already suffered some delays relating to metallurgy.
Now Avalon has been set back a year, and it becomes clear that we should expect all projects seeking to extract rare earths from exotic new minerals to move their timeline ambitions back. There are no short cuts to metallurgy, as Australian processing lab ANSTO enjoys saying, and fast-tracking REO projects may only be feasible for companies with proven flowsheets.
This naturally influences the way we should look at supply and demand for REO, as most of the supply projections envisage production according to idealized timelines given by the companies themselves. Given that shortages for the Heavy REE are already present, the supply shortfall may drag on until well after 2016, providing a longer window of opportunity for companies to come to production.