Oil & Gas Companies might have the Potential to Mine Rare Earth Elements especially with the Forecasted Market Growth
Chirality Research Inc briefly looked at the potential for Oil & Gas companies in Canada to mine rare earth elements from reserves for which they had land rights. But why rare earth elements? They will be in high demand by 2050 because of their applications, and because they are expensive, with the least expensive rare earth element, Lanthanum priced at 1638 USD/ton and Scandium, the most expensive, priced at 3,457,640 USD/ton. Moreover, rare earth elements play a vital role in reducing the carbon footprint.
The Canadian Net-Zero Emissions Accountability Act, which became law on June 29, 2021, enshrines in legislation Canada’s commitment to achieve net-zero emissions by 2050. Figure 1. shows the greenhouse gas emissions by sector, the transportation and energy industry making up the bulk of GHG emissions. Figure 2. shows Canada’s GHG emissions projected to 2060.
Rare earth elements (REEs) are crucial for reducing the carbon footprint. The rare earths are a relatively abundant group of 17 elements composed of scandium, yttrium, and the lanthanides as shown in the periodic table (Figure 3.). The rare earths’ primary application for clean energy is the manufacturing of permanent magnets for electric vehicle motors and wind turbine generators both combating the two main GHG emission sectors, transportation and the energy industry. The distribution of applications of REEs is shown in Figure 4.
The REEs specifically used for clean energy (the manufacture of permanent magnets) are namely neodymium, praseodymium, dysprosium and terbium. Their estimated global demand by 2050 is shown in Figure 5. In a low-demand scenario (assuming a maximum increase in temperature of 2.7 °C in accordance with the Paris Agreement, that significant progress occurs in research and innovation and that there is moderate growth in other sectors), supply can generally keep up with demand. At the other extreme, a high-demand scenario (which assumes only minor improvements in technology, a 100 % global reliance on renewables for primary energy production and full EU decarbonization by 2050, as well as increasing demands from other sectors, such as ICT) anticipates that demand will be significantly above supply.
Of the approximately 160 minerals that are known to contain rare earths, only four are currently mined for their rare earths: bastnasite, laterite clays, monazite, and loparite. The steps in processing REE ores (Figure 6.) are very carbon intensive. The carbon footprint of REE mining and processing is on an average 50 kg CO2e/kg of REE (Figure 7.). For comparison burning 1 kg of coal will produce 2.86 kg of CO2 and 1 kg of coal mined releases 0.42 kg of CO2e. If these values are however normalized with the market price of coal and respective REEs, the carbon footprint of REE mining and processing is significantly less (considering the price of Anthracite coal at 98 USD/ton and the average price of REEs at 340,000 USD/ton).
China however dominates the REE market and reserves (Figure 8.). Two notable cases mark this dominance. In northern Quebec, Geomega Resources Inc. started a half a million dollar mining project which needed to be shelved in 2015 because of competition from China. The Mountain Pass mine in California, after being built in 2010 by Molycorp., gained billions of dollars in market capitalization, but faced bankruptcy in 2015 after prices crashed. In 2017, a consortium of investors including China’s Leshan Shenghe Rare Earth Co. bought the mine for US$20.5 million.
But things are changing (Figure 9.). Industrial demand for certain REEs are projected to shoot up by as much as 2,600% by 2025 according to studies from the Massachusetts Institute of Technology. On June 29, 2021, production started at Canada’s first rare earth mining project, Nechalacho, located about 100 kilometers southeast of Yellowknife. Furthermore, there are 11 Canadian REE projects in the advanced exploration stage, all of which are Canadian owned (Figure 10.).
Figure 11. provides an overview of the current mining scenario in Canada. It is the global leader in the production of potash. The current metal reserves in Canada are shown in Table 1. Canada has REE reserves of over 940,000 metric tons.
As a preliminary exercise we did market research on the world production and US consumption of all REEs along with some other metals. Figure 12. shows the graph for Neodymium. It was found that on an average the REE market will grow at CAGR of 5% considering the forecast period 2022–2027.
In conclusion, taking into account the number of REE mining projects in the advanced exploration stage and the market growth expected for rare earths by 2050, it will be advantageous for Oil & Gas companies to investigate further if they are owning rights to land under which there are REE reserves. An indication of this is traces of REEs present in the water analysis of production brines. These rights could then be leased to mining companies. With majority of the countries pledging net-zero emissions by 2050 the REE demand and production will always be on the rise.
References:
https://www.frontiersin.org/article/10.3389/fenrg.2014.00045
https://doi.org/10.1155/2014/907536
US Energy Information Administration
https://www.eia.gov/energyexplained/coal/prices-and-outlook.php
https://www.nrcan.gc.ca/maps-tools-and-publications/publications/minerals-mining-publications/18733
https://www.nrcan.gc.ca/maps-tools-and-publications/publications/minerals-mining-publications/18733
