Minister still confident in SRC rare earth facility after Vital Metals pause

After a rare earth company pressed pause on its processing facility, a Saskatchewan cabinet minister said the government is in the company’s corner and continues to push forward on its own rare earth plan.

Prime Minister Justin Trudeau and Saskatoon Mayor Charlie Clark (right) during a tour of Vital Metals in Saskatoon on Jan. 16, 2023. (Lara Fominoff/650 CKOM)

Last week, Vital Metals announced it was pausing all construction on its Saskatoon facility, which would produce a rare earth oxide product for sale to a third party.

The company said it had been unable to secure sales on “commercially satisfactory terms.” Vital – which attracted the attention of Prime Minister Justin Trudeau during a recent visit – said it intends to keep its Saskatoon employees on board as it conducts a three-month strategic review.

In an interview with Gormley on Tuesday, Minister Jeremy Harrison said he’s confident Vital will be able to weather the setback.

“We really wish the company the very best, and I have full confidence that they’re going to be able to move forward with the project,” Harrison said.

While the government’s Saskatchewan Research Council (SRC) is also working on a rare earth processing facility in Saskatoon, Harrison noted the government is using a different model and is not in direct competition with Vital.

“The feed stock that Vital is using is called bastnäsite, and it’s a different feed stock than what the SRC facility is using, which is monazite,” explained Harrison, the minister responsible for SRC. “And we’re also doing a different process to get to a different product, in that SRC is going right to the metal production.”

Jeremy Harrison, Saskatchewan’s minister of trade and export development. (650 CKOM file photo)

China has a near-monopoly on rare earth production and processing, and Harrison said the Asian superpower is doing everything it can to keep others from succeeding in the field.

“The Chinese have manipulated the market to crash prices – which they have done historically – to make private sector projects uneconomic in the construction phase,” Harrison said.

“The Communist party in China has an interest in maintaining control of the rare earth market, globally.”

Harrison noted that China is primarily worried about oxide producers like Vital, and said the SRC facility has largely been spared from the same issues because it produces finished metals rather than oxides. He said the SRC project is poised to become a global leader in the industry.

“We’re going to continue forward with our project, and in the long term the market fundamentals are very, very good in this space,” the minister explained.

“Outside of us, there are a tiny handful of institutions that know how to do that outside of China.”

Harrison said the market for rare earths is strong and growing, and there will be greater demand in the future for rare earth metals produced in friendly countries.

Asked whether China’s interference might result in government financial support for Vital, Harrison said it’s something that will likely be discussed.

“The fundamentals of that project have to stand on their own,” Harrison said. “We’re just very supportive and want to see Vital being successful.”

While Vital’s Saskatoon facility has been touted by Trudeau and others, there have also been some changes happening behind the scenes.

In a statement issued in December, Vital announced a slowdown at its Saskatoon facility intended to both save money and align the timing with the construction of a plant in Norway.

“Vital remains committed to the completion of its rare earth processing facility in Saskatoon, Saskatchewan,” the company’s release read.

“To better align capital expenditure with the anticipated timing of revenues based on Vital’s offtake partner’s plant completion, the Company has taken the decision to defer the completion of the rare earth hydrometallurgical leaching, purification and rare earth precipitation circuits of the facility until 2024.”

The company noted the move was expected to delay about $17.4 million in costs until the 2024 calendar year.

Meanwhile, Vital has also seen turnover at the executive level.

Last month, CEO and company director John Dorward announced his immediate resignation as director and gave three months’ notice for his resignation as CEO after a tenure of just a few months. Vital’s chief financial officer Damon Colbert also resigned earlier this month.