POSCO International has partnered with American Resources Corp (NASDAQ: AREC) subsidiary ReElement Technologies to build a rare earth and permanent magnet complex. Upon completion, it will be the first vertically integrated facility of its kind in the United States.
In South Korea on Friday, the companies signed a memorandum of understanding for the new collaboration. It builds on a previous MOU signed by the parties in November focused on rare earth refining, recycling and offtake agreements.
The Posco Holdings Inc (NYSE: PKX) (FRA: PKX) subsidiary will be overseeing the procurement of rare earth intermediate materials and the permanent magnet business. Meanwhile, ReElement will contribute its separation, refining and recycling tech at the Indiana plant.
The initiative could potentially reap significant benefits through receiving government backing from the both countries as the supply chain remains vulnerable due to reliance on China.
The news comes as American Resources stock has been performing excellent. It has surged by over 440 per cent within the past six months, largely driven by a bullish outlook about processing advancements made by ReElement.
American Resources has also been climbing after initiating a rare earth supply deal with privately held Vulcan Elements in August. The quantity of high purity rare earth element oxides was not disclosed, but Vulcan will be paying over US$100 per kilogram.
POSCO Holdings has risen by over 17 per cent since Jan. 1. The steel and magnet producer currently has major supply agreements in place with American and European automotive companies. It will be providing them with an aggregate 8,500 tons of permanent rare earth magnets.
“By combining our patented refining technology with POSCO’s industrial capabilities, we are scaling rare earth processing and strengthening the U.S.-Korea partnership to build resilient and sustainable supply chains for critical materials,” said ReElement CEO, Mark Jensen, in a press release on Sept. 18.
ReElement uses a technology called chromatography to process and refine rare earths. The American Resources subsidiary says it is superior to conventional solvent extraction methods because it uses less harmful chemicals and produces less toxic waste. Furthermore, the company claims it is less energy intensive, more precise, and reduces operating costs.
Read more: NevGold Corp’s limousine Butte drill program targets first Gold-Antimony resource estimate
Complex will help curb national security fears
The move by American Resources and POSCO marks a significant step toward American supply chain sovereignty. As China currently controls about 90 per cent of the rare earth refining industry and 85 per cent of the magnet sector, the U.S. will benefit significantly from its establishment.
Success with development and ramp up of the complex could help lessen the cost of rare earths throughout the United States while also benefitting Europe and the Japanese.
By the end of the decade it could potentially lessen American reliance on China by 50 per cent or more.
Currently, there is only one active rare earth production site in the U.S. and another that is expected to become fully operational in 2027. The former is the Mountain Pass Mine run by MP Materials (NYSE: MP) and the latter is the Brook operation under development by Ramaco Resources Inc Class A (NASDAQ: METC) (FRA: 5R02).
The U.S. currently imports over 80 per cent the rare earths it needs for clean tech, electric vehicles, military technologies, electronics, energy storage systems and more.
Read more: GoldMining chooses to retain its NevGold shares for next 18 months
Follow Rowan Dunne on LinkedIn
rowan@mugglehead.com
