IMC’s proprietary RapidSX separation technology will enable current and future rare earth producers outside of China to serve US, European, Japanese and Korean markets, mitigating the current extreme concentration of rare-earth supply and separation capability in China.
The rare-earth processing business meshes well with Hexagon’s build-out of downstream processing of energy materials and is well covered by the US team that the company has already assembled.
Hexagon’s wholly owned US-based subsidiary, Energy Materials of America, LLC and IMC to form an incorporated joint venture, American Innovation Metals Inc. (AIM) with IMC contributing the RapidSX technology IP for rare-earth separation. Hexagon will invest US$2 million into the construction of a commercial demonstration plant and will pay US$4 million to IMC as deferred consideration, payable from Hexagon’s share of future AIM cash flows.
The commercial demonstration plant is planned to have a production capacity of 60,000 to 80,000 kilograms of rare-earth oxides per year from a site in North America.
The plant is expected to take about six months to construct and commission, and operations are anticipated to commence in Q3 of 2020.
Hexagon managing director Mike Rosenstreich said: “The lack of US-based downstream REE separation capacity presents a serious vulnerability to US national security and the security of its allies, as REEs are critical for defence technologies and US economic growth plans.
“REEs are also vital non-substitutable components of renewable-energy supply chains, critical to meeting America’s future economic, energy and environmental goals.
REE – REO (rare earth oxides) generalised supply chain
“Without downstream capacity to separate and purify REEs, the USA is unprepared for potential supply disruptions, price spikes and trade disagreements related to REEs.
“It is our intention to remedy this situation with the successful commercialisation of the RapidSX approach to REEs.”
“REE supply is very topical amid the US-China trade tensions. Whilst casting a useful spotlight on this supply-side crisis, this is not a ‘supply bubble’ triggered by politics, that is merely a backdrop to a more fundamental issue of declining Chinese supply and processing.”
IM chairman and CEO Dr. Gareth Hatch said: “In the past few years, the authorities in China have been more strictly enforcing environmental protection and pollution-control measures, leading to the closure of non-conforming industrial plants and facilities.
“The REE industry is no exception, and these steps have led to a gradual reduction in REE production capacity, tightening supply. AIM will bring a proven technical solution to the challenge of cost-effective REE separation for the REE supply chain and is poised to make a major contribution to serving increased demand from geographically varied sources of supply.”
Indicative prices for selected commercial-grade REOs of interest to the IMC-Hexagon joint venture in October 2019
“Since the US Congressional hearings in May 2019 and widely reported indications that China could potentially use its REE supply as a bargaining chip in US-China trade negotiations, we have received numerous inquiries from companies with current and near- 4 term mixed REE chemical-concentrate production.
“We are now in active discussions with these and other companies.
“Through AIM, IMC looks forward to working with the Hexagon team, which contributes deep experience in other energy materials, as well as marketing and financing experience, to enable us to focus on the realisation of our objectives.”