Avalon's 25,000 t/y rare earth separation plant in NA to cost $346m

Avalon Rare Metals (AVL:TSX;  AVARF:OTCQX) said Friday that it received the results of a scoping study for the construction of a new rare earth separation plant in North America, estimated to cost around $346 million.

The separation plant flow sheet was designed to produce separated oxides of both the light rare earths and heavy rare earths in the ore from Avalon's Nechalacho deposit, as there is currently no such separating facility currently available outside China.

"The inclusion of a dedicated separation plant into our development model for the Nechalacho project will enable Avalon to supply its customers with quality separated rare earth oxides and ultimately position Avalon as a leader in the rare earth marketplace in both the light, and also the truly rare, heavy rare earths," said president and CEO Don Bubar.

The scoping study, which was prepared by SNC-Lavalin, said that the design of such a plant, with an intended production capacity of 25,000 tonnes per year, would cost around $346 million, according to SNC's estimates. 

The plant capacity is intended to handle the estimated production of 10,000 t/a from Nechalacho, any future Avalon production increases, and process material from other potential future producers, especially those producing chemical precipitates rich in the heavy rare earths, the company said.

The facility would cover an area of some 5.2 acres, and it was assumed it would be located in southern Ontario for the purposes of the study. Avalon said that a number of possible sites have already been identified and additional sites will be also be considered in different parts of the world.

Rare earth elements are used in the production of many clean technology products such as hybrid and electric vehicles, wind turbines, and energy-efficient lighting. Primary supplies originate mainly from China and are increasingly constrained as Chinese internal demand starts to outstrip domestic supply.

As a result, the Chinese government has begun to reduce the amount of separated rare earth oxides available for export.

Avalon Rare Metals' flagship project is the 100%-owned Nechalacho Deposit in Thor Lake, Northwest Territories.