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Permanent magnets are the most valuable application for rare earths, representing over 90% of the total value of rare earths demand.

Permanent magnets are used in electric vehicles, wind turbines, smartphones and military applications.

The four most important rare earths for permanent magnets are neodymium (Nd), praseodymium (Pr), dysprosium (Dy) and terbium (Tb). Demand for these is predicted to grow significantly in coming years, potentially leading to significant supply shortfalls.

The supply risk is highest for dysprosium and terbium, the two heavy rare earths in permanent magnets.

Globally, most rare earths are sourced from mineral (hard rock) deposits. These typically require large, costly processing plants and a significant lead time to reach production.

An alternative source of rare earths is clay-hosted deposits. These typically contain a mixture of ionic adsorption clay (the ionic component) and a non-ionic component. The relative proportions of each vary enormously in different deposits.

The rare earths in the ionic component can be leached using a low-cost desorption process, which produces a solution containing rare earths that is subsequently precipitated into a mixed rare earth carbonate (MREC).

Ionic adsorption clay deposits have historically been mined only in southern China.

Industry processing experts indicate it is very difficult to economically extract rare earths from the non-ionic component. Thus, it is critical to have a high ionic proportion when extracting clay-based rare earth minerals.

The other major advantages of ionic adsorption clay deposits are: