Wyoming’s rare earths mining and processing specialist Rare Element Resources Ltd. (OTCQB: REEMF) is delaying the startup of its demonstration plant in Upton due to drastic inflation.
Originally scheduled to open this month, the recovery and separation facility will now not be up and running until at least Sept. 1. Rare Element is waiting on the U.S. Department of Energy (DOE), which is contributing 50 per cent of the required capital, to approve an increased budget for the project.
Due to ascending inflation, which has risen by about 18 per cent over the past four years, the cost of the facility is now estimated to be about US$9.6 million higher than originally expected at US$53.6 million.
“The DOE is aware of the extraordinary inflationary pressures that have occurred since the project budget was initially estimated in 2021,” Rare Element President Ken Mushinski said Monday. He added that the company hopes the DOE will be willing to contribute more cost-share funding to mitigate Rare Element’s expenses.
A groundbreaking ceremony for the plant, which will receive a stream of rare earths concentrate from Rare Element’s Bear Lodge project in northern Wyoming, was held last fall. Wyoming’s Energy Authority has contributed US$4.4 million to the facility as well.
Concept image of operational demonstration plant. Image credit: Rare Element Resources
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General Atomics: Rare Element’s number one stakeholder
San Diego’s major military contractor holds a 70.6 per cent interest in Rare Element. General Atomics just partnered with the controversial aerospace company Lockheed Martin (NYSE: LMT) to develop weapons systems for remotely operated aircraft.
Rare earths are essential for military suppliers like Lockheed and General Atomics. Their necessity in the construction of fighter jets, drones and other expensive technologies have prompted governments and companies that rely on them to invest heavily in producers.
Wyoming’s government, for instance, recently awarded American Rare Earths (ASX: ARR) (OTCQX: ARRNF) almost US$10 million to advance its Cowboy State magnet metal mine. Projects like these will help ensure a steady domestic supply of elements like neodymium and praseodymium while reducing reliance on China and other foreign suppliers.
“The Department of Defense is focused on the entire rare earth supply chain,” Pentagon spokesman Jeff Jurgensen told Cowboy State Daily recently.
Weapons manufacturers and military contractors also utilize significant quantities of gold for various equipment due to its excellent conductive properties. These include radar systems, computers and other tech. Wyoming’s U.S. Gold Corp. (Nasdaq: USAU) will soon be producing about 1.5 million gold equivalent ounces from its CK Gold Project near Cheyenne, thereby helping to fulfil demands.
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