Rare Earth Mining & Ore Processing

Mining is the first stage of the REE supply chain. REE-bearing ores are extracted from geological deposits and concentrated to ~60-70% rare earth oxide (REO) equivalent. This stage is relatively straightforward technologically but faces geographic concentration risk and environmental permitting challenges.

REE Ore Types

Bastnaesite (Primary LREE Source)

• Fluorocarbonate mineral; typically 5-10% REO by weight
• LREE-rich (La, Ce, Nd, Pr)
• Major deposits: China (Baiyun Obo), USA (Mountain Pass), Vietnam
• Easy flotation concentration process

Monazite (Mixed LREE/HREE Source)

• Phosphate mineral; typically 3-5% REO by weight
• Contains both LREE and HREE; better HREE content than bastnaesite
• Major deposits: Brazil, India, Australia, Myanmar
• Higher environmental concern (contains thorium/uranium radioactivity)

Ionic Clay (HREE-Rich Source)

• Weathered clay deposits; typically 0.05-0.5% REO by weight
• HREE-enriched relative to LREE
• Major deposits: Vietnam, Southern China
• Extractable via acid leaching; faster extraction but higher environmental impact

Mining Operations

Open-Pit Mining (Bastnaesite, Monazite)

• Ore extracted via conventional surface mining
• Capital intensive: $500M-1B+ per new mine
• Development timeline: 3-5 years exploration to production

In-Situ Leaching (Ionic Clay)

• Acid leaching solution injected into clay deposits
• Rapid extraction; lower upfront capex
• Higher environmental impact (acid runoff, water contamination)

Ore Concentration & Beneficiation

Raw ore is concentrated via flotation or gravity separation to 60-70% REO equivalent. Output is "ore concentrate" sold to separators. This intermediate product is the trading point between miners and separators.

Process Steps

• Crushing and grinding to fine powder
• Flotation separation (bastnaesite) or gravity/magnetic separation (monazite)
• Filtration and drying
• Output: 60-70% REO concentrate (~30-40 tonnes concentrate per 100 tonnes raw ore)

Geographic Production

Economic & Financial Metrics

Mining Economics

• Operating cost: $20-50/tonne ore (varies by deposit grade)
• Capex: $500M-1,500M per new mine
• Time-to-production: 3-5 years for permitting and development
• EBITDA margins: 10-20% (highly cyclical)

Commodity Pricing (Ore Concentrate)

• Concentrate pricing: $2-8/kg REO equivalent (varies with element mix)
• Minimal pricing power; separators negotiate multi-year contracts

Environmental & Permitting Risk

• Monazite mining faces radioactive materials handling requirements
• Water management critical; tailings ponds require long-term monitoring
• Permitting in developed markets (USA, Australia) is slow and costly
• China mining is less regulated but faces increasing ESG scrutiny

Supply Chain Position for Investors

• Miners have lowest margin profile (10-20% EBITDA)
• Most exposed to commodity price swings
• Capex-intensive; execution risk on project development
• Long development timelines create gap between investment announcement and revenue

Key Takeaways

• Mining is geographically concentrated in China, USA, Southeast Asia
• Ore concentrate is the commodity traded between miners and separators
• Mining margins are thin; commodity-like pricing dynamics
• New mine development takes 3-5 years and carries execution risk
• Environmental/permitting risk is highest in Western jurisdictions