The announcement comes as manufacturing-focused countries, such as Japan, increase their efforts to secure supplies of REEs from sources outside of China. REEs are vital components in the manufacturing of modern technologies such as wind turbines, hybrid cars, green technologies, televisions and computer screens, and it is thought that the island nation will be able to benefit from the discovery. In a written statement to Jamaica's parliament, Paulwell notes that researchers from Nippon Light Metal Holdings believe REEs can be efficiently extracted in the region, where a once-flourishing bauxite industry has struggled amid global economic uncertainty. It is believed that Nippon approached the Jamaican government in January 2012 with claims that it has the capability and knowledge to mine REEs found in the country's red mud supply. Discovery could boost economy In the statement, Paulwell highlights that the discovery has the potential to provide a significant boost to the Caribbean island's sputtering economy. After gaining independence in 1962, Jamaica's economy went through a period of successful growth, partially as a result of the mining of bauxite, which leaves behind large quantities of red mud - the same substance that researchers claim is a source of REEs, the UK's Wired reported. While the country remains the world's fifth-largest exporter of bauxite, ongoing global economic uncertainty has led to reduced demand and minimal growth across the sector.
"[W]e are at the starting line of an opportunity that has the potential to redefine Jamaica's economic prospects in a positive way," said Paulwell. “[T]he Government of Jamaica perceives the extraction of the rare-earth elements that are present in Jamaica, to be an exciting new opportunity to earn much needed foreign exchange and create jobs.”Authorities on board While some feel the Jamaican find will amount to nothing more than media hype, interest has been piqued by the confirmation that the Jamaica Bauxite Institute (JBI) has already signed a memorandum of understanding (MoU) with Nippon for the establishment of a pilot project aimed at REE extraction from red mud. The MoU was signed in September last year and a pilot project will be undertaken to determine the scope of a proposed commercial project, according to Jamaica Information Service. The project is scheduled to last six months and construction of the plant is expected to commence in February. The project has already been approved by the National Environment and Planning Agency and is currently awaiting final approval from other regulatory agencies. Additionally, the Jamaica Environment Trust (JET) had given its tentative support to the project. Environmental issues relating to production are normally one of the main hindrances in the progression of any REE project and an organization such as JET being onboard is a massive coup for the country's future REE ambitions. Diana McCaulay, JET founder and CEO, said the Trust is "in favour of using waste product to investigate economic opportunities." The organization also said it has requested details about the precise type of processing that will be used in order to accurately assess any potential environmental impacts. "It's a good idea to take what is now essentially waste and make it into something useful that can be sold, that's broadly speaking," she told the Jamaica Observer.
An opportunity that must be pursuedIn his statement, Paulwell notes that Nippon Light Metal's objective is to extract an estimated 1,500 metric tonnes of REEs per annum and that the concentration of REEs discovered in testing samples so far is significantly higher than those from other red mud sites around the world. “Rare earth oxides, the commodity that will be extracted, are currently being traded at rates of up to $3,500 US dollars per kilogram ... when we compare that to alumina, which is now being traded at $330 US dollars per tonne, it is clear that this source presents an opportunity Jamaica must pursue, and which must be managed in such a way that Jamaica and Jamaicans benefit significantly,” he said. It is of little surprise that the Jamaican government is pushing the project forward and that Nippon Light Metal has confirmed it will be investing $3 million in buildings and equipment for the project, as well as taking on all operating costs. The JBI and Nippon Light Metal will own the results in equal parts, while the government and Nippon Light Metal will jointly own any REEs produced during the pilot project phase. While the project has moved forward at a remarkable pace, the Jamaican government has underlined that REE resource development may have environmental implications and that these need to be identified and managed. It noted that the aim of the pilot plant study is to specifically map out any potential impact on land, water and air, as well as the effect of neutralizing any by-products of REE extraction. With this project still at such an early stage, it is unlikely to have any profound effect on the market in the short to medium term. However, investors will undoubtedly have noted the reasonable ease with which events have unfolded - a far cry from the regulatory minefield that other projects around the world are restricted by.
Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article. Related reading: Japanese Firm Opens Rare Earth Plant Rare Earth from Mud: Commercial Pipe Dream or Possibility? from Rare Earth Investing News