Senergy Media Club

China Threatens to Weaponize Rare Earth Materials; Establishing Additional Sources of North American REE Production is Now Even More Important

On July 3, China announced it will impose export restrictions on eight gallium and six germanium products beginning on August 1 for national security reasons. These exotic metals, which are byproducts from refining aluminum and zinc, are used in numerous cutting-edge technologies, particularly in silicon chips for the semiconductor sector. China’s move is widely viewed as retaliation for U.S. curbs on the sale of technologies to China.

China’s gallium and germanium export controls could lay the groundwork for an even broader action, the curtailment of exports of rare earth elements (REEs), crucial materials used in a wide variety of technology devices such as smart phones, digital cameras, flat screen televisions, and electronic displays. The clean energy and defense contracting industries are also heavy users of REEs. Not surprisingly, the demand for rare earths is soaring: the independent research firm Adamas Intelligence projects the global demand for rare earth oxides (REOs) will more than triple by 2035 to US$46 billion from US$15 billion in 2022.

China has restricted the exports of rare earths before — an action which caused prices of some REOs to rise almost exponentially for several years. In 2010, China severely restricted sales to Japan following a territorial dispute regarding the Japan-administered Senkaku Islands. China also claims those islands and calls them Diaoyu. In turn, Japan scrambled to find alternative sources, forcing prices higher.

What are Rare Earth Elements?

REEs are relatively plentiful in the earth’s crust but are typically widely dispersed, rendering their mining in a single location quite expensive (unless the site is determined to have enormous resources). The molecular structure of REEs is such that they frequently occur together in minerals, perhaps even in multiple mineral structures. Not surprisingly, these characteristics generally make their separation and extraction difficult.


The 17 rare earth elements are generally categorized as light or heavy elements. Each source of rare earth material will generally contain the entire spectrum of REEs, but in varying percentages. The heavy REEs (HREEs) are rarer and generally sell for significantly higher prices, as they are less common and more costly to separate. In contrast, light rare earth elements (LREEs) are produced in larger quantities because they occur naturally in greater quantities. Producers strive to meet the high demand for Neodymium (Nd) and Praseodymium (Pr), which necessitates the over-production of all associated LREEs like lower-priced cerium and lanthanum. For example, a typical rare earth concentrate from a mining operation may contain 75% of lower-priced lanthanum (La) and cerium (Ce), perhaps 15% of higher-priced Nd and Pr,and about 10% other HREEs like dysprosium (Dy) and terbium (Tb).


China’s Dominant Rare Earth Position

 According to the U.S. Geological Survey, China produced 70% of all rare earths mined globally in 2022. Even more important, Adamas Intelligence estimates that China controls at least 85% of the world’s rare earth refining capacity – the ability to transform mined rare earth ores into extremely valuable rare earth oxides (REOs).


In recent years, the U.S. has managed to reduce its dependence on China for rare earth supply, but only slightly. According to Reuters, America sourced 74% of its rare earths from China between 2018 and 2021.


North American REE Industry

 MP Materials Corp. (NYSE: $MP) owns and operates the Mountain Pass facility in southern California, the only integrated rare earth mining and processing site in North America. The bastnaesite ore body at Mountain Pass has been mined as a principal source of REEs for more than 60 years. In 2022, Mountain Pass produced about 42,500 tonnes of REOs (about . Today, MP’s stock market capitalization is around US$4.4 billion.


Defense Metals Corp. (TSXV: $DEFN; OTC: $DFMTF) is a much lower-priced (C$67 million stock market cap) rare earth play. The company owns 100% of the advanced-stage Wicheeda project in central British Columbia, Canada, which has the potential to be the next North American rare earth mine. The Wicheeda deposit has favorable geology and mineralogy; it hosts bastnaesite and monazite; rare earth minerals that are found at Mountain Pass and at Mount Weld, the major Australian rare earth mine. Rare earth deposits comprised of bastnaesite, and monazite have been the only rare earth minerals that have been exploited as sources of profitable commercial rare earth production. See Figure 1.

Figure 1: Defense Metals Wicheeda Mineralogy and Metallurgy Compares Favorably with the World’s Primary Producing Rare Earth Facilities

The 6,759-hectare (~16,702-acre) Wicheeda Project contains five million tonnes of indicated resources at a total REO grade of 2.95%, and 29.5 million tonnes of inferred resources at a 1.83% grade, reported at a cut-off grade of 0.5% total REO within a conceptual (LG) pit shell.  In addition, the project is ideally situated both for mining and production. It is just 80 kilometers (km) northeast of Prince George, a mining center with a skilled labor force, and sits along a major forestry road that connects to a paved highway.  A hydroelectric power line, natural gas pipeline, and a Canadian National Railway line are also nearby.  The busy port of Prince Rupert is just 500 km to the west.  See Figure 2.

Figure 2: Defense Metals’Wicheeda Project Location

In addition to completing significant exploration drilling to define the Wicheeda REE deposit, Defense Metals has completed extensive metallurgical testing that showing the ability to produce a > 40% REO flotation concentrate that is amenable to hydrometallurgical processing to produce a rare earth oxide product for sale to end users. See Figure 1. All of this work is being  incorporated into a pre-feasibility study that is expected to be released in the first half of 2024.

If Wicheeda begins to produce REOs it could be one of the biggest REO production facilities in the world.  More specifically, the project should produce about 25,000 tonnes of REO annually, or about 10% of global REO manufactured in the world.  See Figure 3.

Figure 3: Wicheeda Could Supply ~10% of Current Global Production

Qualified Person

The scientific and technical information contained herein as it relates to the Wicheeda REE Project has been reviewed and approved by Kristopher J. Raffle, P.Geo. (B.C.), Principal and Consultant of APEX Geoscience Ltd. of Edmonton, Alberta, who is a director of Defense Metals and a “Qualified Person” (“QP”) as defined in NI 43-101.

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