Ms. Christiane Villemure (Director General, Industry and Economic Analysis Branch, Department of Natural Resources):
Very good. Thank you very much.
Mr. Chair, honourable members of the committee, I am the director general of the Natural Resources Canada branch that studies the industry and economic aspects of minerals and metals. My colleague, Dr. Habib, is the director general of the Canmet lab, which is in charge of the scientific aspects of mines.
It's a privilege to be here today and to talk to you about rare earths.
We will see how rare earth markets are relatively small and how they feed into critical uses essential for the high-tech and clean-tech industries, altogether worth trillions of dollars.
While mining rare earth is very similar to mining other commodities, the rare earth field is new and presents some significant S and T challenges for processing and refining rare earth elements. This is important in view of the anticipated shortages of some rare earths, where some Canadian projects show promise, so we will discuss some of the work done by CanmetMining to address these aspects.
What are rare earths? Rare earths are a group of 15 elements, plus yttrium and scandium, that exhibit similar properties and occur in many of the same mineral deposits. Ironically, rare earths are not rare. These elements are fairly abundant on the earth, but rarely occur in concentrations that are economically exploitable. They're found together, often with other elements, and are difficult to separate because many of their properties are similar.
You've probably heard about light and heavy rare earths. Very simply, those elements on the left side of the lanthanite series of the periodic table—on the slide or the diagram that we've shared with you—are considered light rare earths, and those on the right side of the periodic table are heavy rare earths.
Most deposits are rich in light rare earths. They are valued in many applications. Considerably fewer deposits are rich in heavy rare earths, so global production is lower and prices are generally higher. Four heavy rare earth elements—europium, terbium, dysprosium and yttrium, together with neodymium—have been defined as critical by the United States Department of Energy, Japan, and the European Community because of their scarcity, high demand, and criticality in many high-tech applications.
The luminous, magnetic, catalytic and other characteristics are what make rare earths so indispensable.
Hybrid vehicles, rechargeable batteries, mobile phones, LCD screens, laptops, wind turbines, medical imaging equipment, radar systems, catalytic converters, alloys that are more corrosion-resistant, all of these require rare earth elements. There's not an automobile produced today that does not contain dozens of motors powered by permanent magnets containing rare earths.
It's fairly well known that in most of these applications only small amounts of rare earth are required. However, the considerable growth of those industries, now totalling close to $5 trillion, and their innovative technological capacity, are driving greater demands for rare earths. Over the last 10 to 15 years, the world consumption of rare earth elements has increased at 8% to 12% per annum, a trend that experts agree will continue, and may increase.
We can appreciate that even if global production of rare earth is relatively small, about 130,000 tonnes per year, a disruption in supply chains would impact global industries in a significant way. Up until this year, China controlled over 97% of global rare earth production. The States, once domestically self-reliant, has become dependent on imports from China. Two companies have begun to mine rare earths this year, in the States and in Australia. These are predominantly light rare earth mines. They will not produce the critical heavy rare earth elements that global industries require. China will remain the dominant supplier of heavy rare earths until other producers emerge.
According to global analysts, the forecasted demand and supply of rare earths by the year 2020 presents a mixed picture. There may be a significant oversupply of many of the light rare earths impacting the economics and viability of rare earth mines under development elsewhere in the world. In the same timeframe, there may be some significant supply shortages of heavies, those considered critical.
China, the sole supplier of four of these critical rare earths, has implemented a series of gradually more stringent export restrictions and trade bans since 2005. In March 2012, the U.S., Japan, and the European community jointly filed a complaint with the World Trade Organization against China's rare earth export restrictions. Canada is a third-party complainant in this action, and we're expecting the WTO dispute settlement panel report to be released soon.
Moreover, expert analysts forecast that China's heavy rare earth resources will be depleted over the next five to eight years. China will need to replace these resources to supply its domestic industries.
Canada currently imports small tonnages of light rare earth compounds and also imports rare earth permanent magnets, components, and products that contain permanent magnets. Interestingly, Canada's geology is rich in the heavy rare earth resources. Specifically, eight of the twelve advanced rare earth exploration projects contain elevated concentrations of the critical rare earths forecasted to be in deficit.
There are more than 200 individual exploration projects identified in Canada at different stages of development. While Canada does not currently produce rare earths, experts have indicated a strong potential for at least two or more Canadian rare earth projects to come to the marketplace by the year 2018. Interestingly, these advanced projects are rich in critical heavy rare earths. Projects to watch are those that are planned to reach production in the next four to five years: Avalon, Quest, Matamec, Pele Mountain, and Orbite.
We all know that mining itself is complex and an area of incredible innovation, overcoming logistical barriers, engineering, and environmental management challenges. Rare earth elements are all of that, plus some additional challenges. There are complex science and technology challenges throughout the supply chain. Hydrometallurgy, to separate the individual rare earth oxides needed by the manufacturing industries, has been identified as a need by the nascent Canadian rare earth elements industry currently in its formative stages.
Over the past two years, NRCan's CanmetMining has conducted rare earth element research, some in collaboration with industry. Our research is focused on mineral and metallurgical processing challenges that are associated with hard rock deposits, those that we find in Canada.
Specifically, we have projects looking at the mineralogy of Canadian deposits; physical separation to produce high-grade concentrates; through hydrometallurgy, developing separation processes; and understanding any toxicity issues associated with rare earths—although we want to recuperate a maximum amount of these materials. We are also developing certified reference material as quality control tools for analytical laboratories.
In closing, we're dealing with materials with small markets feeding bigger markets, producing goods that are important for our daily life. While NRCan is involved in advancing solutions to address S and T challenges, it is encouraging to watch industry evolve and organize itself.
Mr. Chairman and members of the committee, we would be pleased to answer your questions.
Ms. Christiane Villemure:
Mr. Chairman, the general timeframe—and it's a very general timeframe—to get to a producing mine starting from the exploration stage would be between seven to ten years. Those projects listed on the diagram were started a few years ago, and they have achieved certain steps in the mine development process. For example, they have pre-feasibility studies and some form of characterization of their deposit. This is why we can report on them about tonnage and an approximate year of production.
The years that are outlined in this diagram come from company websites, so I'm not sure.... Sometimes there are various sources of information. If you want, I can validate this information or make sure you have the right information, but as far as I know, what is in this table is the years of production as they are predicted by the exploration companies.
Exploration companies will have to go through various stages. They normally start with identifying a deposit and doing some study to validate whether the metal of interest is found in sufficient quantities in the deposit they have identified. They will go through successive rounds of characterization to increase their knowledge.
When they are confident that a deposit is of sufficient magnitude, they will embark on pre-feasibility studies, and at that stage companies are starting to assess the economic potential of a deposit. On that front, they will also normally do a few studies to further confirm the economic viability of a mine.
Companies also need to go through the environmental assessment process, which is a very stringent and thorough process, to make sure that mine development will not have deleterious effects on the environment.
Further, companies will do a formal feasibility study. Sometimes we refer to these as “bankable” feasibility studies. This is the level of information that allows a company, for example, to go to a bank and get a loan for construction. This is normally in the very last stage, in which there is a lot of information confirming the viability of a producing mine.
Mr. Peter Julian:
Thank you for that.
It's interesting to note that money dries up in March 2014. So obviously, unless there's a renewal, we'll be going backwards.
I was interested in knowing whether or not NRCan, through the Geological Survey, is able potentially to help with these projects across the country. I note that, if I'm not wrong, we're basically looking at two different ends of the country: the Quest development is in Labrador, it appears from the map, and then the Avalon development is in the Northwest Territories. So we have companies now looking at both ends of the country.
To what extent is NRCan available to provide supports for exploration?
I think I'm running out of time, so I'll put my last question out to you as well.
In terms of the environmental issues, to what extent is NRCan able to do some work either within the ministry or with other ministries to determine what the environmental issues are going to be, so that we tackle those first off, even before the development of the sites occurs?
Mr. Bob Zimmer (Prince George—Peace River, CPC):
Thank you again for appearing before the committee.
I have a question about page 5 in your slides. There's one thing that's of interest to me. Again, I'm from northeastern B.C., so we deal with a lot of natural resources. Some, I guess, are concerned about how those resources are developed, but we've developed enough procedures that are very safe, and very safe for consumers and all the rest of it.
I'd like to talk about how rare earth elements are used in the green energy industry, or the green economy, as some call it. I've had this discussion with different groups, too, about how much actual coal is involved in making one wind turbine. It's between 140 and 170 tonnes, so sometimes I guess the green movement, if you want to call it that, doesn't necessarily understand that even for their own green technologies, they still need these materials.
I just wanted to ask a few questions about—and we have it on the slide—what materials go into a hybrid car that would be considered rare earth elements. It's on the slide, but it's very small, so I can't quite read it. Could you speak to that?