The Penco Module project, from the Aclara company, seeks to extract concentrated lanthanides from superficial ionic clays located in the commune of Penco, in the Biobío Region, with a completely green extraction process.
Electromobility is just around the corner and Latin America is a region rich in critical minerals to achieve the long-awaited transition towards electric vehicles. Rare earth elements - a group of 17 chemical elements - can now be added to copper and lithium as a key input to accelerate this process.
And it is in Chile - the first producer of copper and second of lithium in the world - precisely where the Penco Module project is located, run by Aclara - a company linked to the Hochschild group of Peru and listed on the Toronto Stock Exchange in Canada. - which aims to extract concentrated lanthanides from superficial ionic clays located in the commune of Penco, in the Biobío Region.
Last April, the company - which took over the project in 2019, after acquiring it from the Chilean Minera Activa, the mining arm of the LarraínVial Group - presented a new Environmental Impact Study (EIA) to the Environmental Assessment System (SEA) with a 100% sustainable approach.
“We have a site that is quite rare to find in the world. Most of these are located in China, a country that has an advantage in the rare earth industry,” says Ramón Barúa Costa, executive director of Aclara .
However, the executive assures that unlike the rare earths extracted from rock in the Asian giant, those from Module Penco have many benefits.
“This type of ionic clay deposits has three great advantages. First, metallurgy is very simple. You combine the clays with water and ammonium sulfate, which is a fertilizer, and that is enough to explore rare earths. The second is that this deposit has the rare earths that are necessary for green technologies and therefore are the most valuable. And third, it has no radioactivity. Based on this, we have developed a process that is also unique in the world and has been patented in Chile, the United States, Brazil and China,” says the Peruvian executive.
According to Barúa, the extraction process - called Circular Mineral Harvesting - is completely green since it does not use explosives and does not require crushing and grinding, which are two of the stages that generate the largest carbon footprint in the conventional mining industry.
“It is a closed system based on the recirculation of water and fertilizers with an efficiency of 95% and 99%, respectively. This recirculation means that we do not have solid or liquid waste and that would make us the only mining company in the world that does not have a tailings pond. Since the physical properties of the clays have not changed, we can return them to where we extracted them from,” explains Ramón Barúa.
GREEN RARE EARTH EARTH
Precisely this approach to sustainability and circular economy is Module Penco's competitive advantage in a technological industry, such as electromobility, that is becoming greener and demanding its suppliers throughout its chain to have sustainable practices.
And the name rare earths does not respond to the fact that they are difficult to find, but because expensive and toxic processes can be used during their extraction. Although China is the main producer of rare earths in the world (in 2022, according to Statista data, it produced 210,000 tons of rare earth oxide, followed far behind by the United States, with 43,000 tons), accusations of bad practices and serious Environmental impacts in the Asian country have not been long in coming.
“In the case of metals and rare earths, in particular, the market and the end consumer increasingly focus on product traceability. A consumer wants to know how the elements that are going, in this case, in an electric vehicle, which is going to be the main demand for rare earths, have been extracted. By definition, a buyer of this type of vehicle is someone who cares about caring for the environment. And that is why our product is going to have a very important and very significant advantage over the product from Myanmar or China, where these rare earths are extracted with processes that are not environmentally friendly,” says Ramón Barúa.
Regarding the prices of rare earths, which include chemical elements such as scandium, yttrium and 15 elements of the lanthanide group (lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium , thulium, ytterbium and lutetium), these have experienced an upward streak given the increase in demand for electric cars.
For example, in 2022 the price in China of the praseodymium-neodymium alloy used to make the super-strong magnets in electric vehicle motors doubled compared to 2021. By July 2022 it had already skyrocketed by more than 10%. , reaching 1.17 million yuan (US$184,072) per ton.
Everything indicates that the price will continue to rise given the nascent electromobility boom and the uncertainty of the supply of rare earths. In the case of those extracted in Chile, the price would be above the market given that the cost to extract them is higher, but the environmental impact is practically zero.
“That (extracting ionic clay) is going to have a very high cost for us, but we are willing to do it. In this new permit that we have entered, 100% of the water that we are going to use will not be taken from any natural source, but rather we will use treated domestic water, coming from some of the Essbio (sanitary company) systems. Before this water goes to the sea, we will use it in 100% of our process. Buying that water and transporting it also has a significant cost, but it is the correct and sustainable decision, it is what the community expects of us. Water is a scarce resource and there is actually no limit to taking maximum care of it,” explains the CEO of Aclara.
The Peruvian executive does not dare to give a figure on its price, since they are starting from a new market without quotes that provide a frame of reference. “It is not about getting a premium that is 10, 20 or 30% more, but rather we are thinking about placing the product at prices that are significantly higher than the Chinese ones because they reflect a cost structure and significantly higher production quality.” . We are even thinking that we are not even going to use Chinese prices as a reference, but rather our objective is to develop a mechanism to appreciate these elements in a one-on-one conversation with automotive manufacturers,” he says.
WHAT THE PROJECT INCLUDES
Penco Module is a project that will require an investment of US$ 130 million - US$ 90 million more than the previous project - and a useful life of 17 years. It includes the creation of six extraction zones, two disposal zones, a processing plant with a capacity of up to 320 tons/hour of mineral, to produce 1,700 tons per year of rare earth concentrate, and four temporary soil layer storage zones. vegetation, along with the enabling and/or improvement of roads to access the different areas.
“Our initial final product is going to be a highly pure rare earth concentrate. I believe there is no such pure product in the world and with a very important characteristic: it does not contain radioactivity. It is a product that will be highly demanded by automotive companies in the United States, Europe and Japan. We have already received some interest from them, but in fact it is a product that requires subsequent refining stages that will occur mainly in the United States. and in Europe, where governments are offering significant incentives in order to build this rare earth value chain,” says Barúa Costa.
Regarding financing, in December 2021 Aclara raised US$ 100 million on the Toronto Stock Exchange. To date, there are US$60 million left that will be used to obtain permits, the pilot plant, carry out the feasibility study, continue exploring new modules and develop commercial efforts. "We are going to finance the rest of the money surely towards the second half of next year, for this it will be important to have permission, with a commercial agreement, perhaps with an important automotive company that gives us the support that they are going to buy the product at the prices they need,” he says.
The automotive industry's interest in rare earths is great. He clarifies, for example, that he has already been receiving direct calls from automotive manufacturers - he does not specify which ones - to sell them his production. According to Barúa, as with lithium, electric car manufacturers have realized something that traditionally did not happen, that they have to go out and look for critical materials for this new industry directly from the mine.
In the short term, between June and August, a pilot plant will come into operation in Concepción whose objective is to certify the company's extraction process and at the same time generate samples that will go to refining plants in the United States with a view to originating a chain of supply of permanent magnets and motors for electric vehicles in the West. “It will also serve to invite the community and authorities to get to know us and see first-hand this innovative process of producing without generating solid or liquid waste,” he assures.
For now, the SEA accepted the EIA of the Penco Module for processing and the company's objective is to start operating in the first quarter of 2026. And the main bottleneck for the project will be obtaining the environmental permit, the CEO of Claria is confident that the study presented is quite robust.
In the meantime, Aclara has been identifying more areas in Chile with high prospectivity for rare earths and ionic clays, specifically in two locations where the company has begun to install some drills. In addition, it is highly concentrated in Brazil - although it does not specify the exact location - and is interested in adding a new country to its supply of rare earths, as long as they come from clay.
“At Aclara we are convinced that the future of rare earths is through ionic clay, that is what we are looking for because of its cleanliness, its simplicity and because it is the type of deposit that allows sustainable production,” concludes Ramón. Barúa.
