Swedish mining company LKAB last month confirmed the discovery of Europe's largest rare earth deposit, at Per Geijer in Kiruna. The site has the potential to cover around 30pc of Europe's future needs, reducing the region's reliance on Chinese imports and supporting energy transition efforts. But the road ahead is long and complex, and it could take more than a decade before the project gets the green light from regulators. Argus spoke with LKAB's senior vice-president Pierre Heeroma about next steps at Per Geijer, diversifying rare earth supply chains and the need to support new mines in Europe:
Why is this discovery important?
At LKAB we plan to extract rare earth elements as a by-product of iron ore mining. This would meet roughly 30pc of Europe's needs for rare earths. And when it comes to phosphorus, it is seven times Sweden's minerals fertilizers demand. So it's a big amount that we could provide both to Sweden and to the rest of Europe. But it will take some time to get that production started.
How long will it take to develop — more than 10-15 years?
[Yes,] for the new deposit. But you have to remember that we also have appatite in the other mines that we are operating today. They have lower grades, but still, it's a by-product. So the idea is to start the production from those in the coming years. Exactly when is not decided.
We are doing all the feasibility studies. We are trying to buy an industrial site in Lulea to establish that industry. We will need to have all the permitting happening which has been slow… It will start a little bit earlier, coming from Kiruna and Manbay. But then to get Per Geijer in production it will probably take a little bit longer.
That is quite a long time
The process is slow and expensive… It has been an issue for the industry. So what we are working on now is to try to get the political system to understand that we don't have any problem if they are very demanding on what needs to be done and what needs to be achieved [environmentally and socially].
But the problem is these processes need to go faster so that we can move on and get into production. Otherwise, that's exactly what we have seen in Sweden, because no mine has come on line for 13 years.
To attract investment, geology is important, of course, but then on top of that, the ruling system needs to be well-oiled. It needs to work well so that when you make an investment, you know that if you find something, you will be able to mine it and sell your product. Otherwise, if that is too uncertain, then you go somewhere else where you are convinced that it is worthwhile investing and where you are also sure that if you have a mining licence you will be able to mine at the end of the day.
In Sweden, some companies have had mining licences, but they have never been given a permit to start mining.
Ultimately permitting is a national process, but are you in conversations with the EU ahead of the Critical Raw Materials Act?
Yes, we're trying to do our best to explain how things work… I think more and more now, authorities need to balance the different aspects of [mining] and to see how important this for society is. We have this wake-up call with war suddenly back in Europe, which has disrupted the market. Energy has been at the forefront because we were very dependent on energy coming from Russia. But I think they see it also in metals and minerals.
They start to understand that we need to secure a little bit of the supply at home or in Europe, with countries where we have common values. I think it is going to be hard to rely on countries where the values are so different.
Currently, China extracts around 80pc and refines 90pc of rare earths globally
We have had 20 years plus of a good economy in Europe, very much a result of the booming economy of China. But we are very dependent suddenly and you never know what China will want at the end of the day. I think China and some other countries have very long-term strategies [in terms of natural resources]. We are lacking that in Europe and we need to get back into this thinking. It requires political parties to look beyond the next election. We have to go back to something that is good for society over the long term. I don't really see that in the everyday kind of debate.
LKAB is looking to process its rare earth oxides through a company in Norway. Can you tell us more about it?
We have a majority stake in a junior company in Norway, REEtec. They have developed a process to separate the different rare earth oxides. So that's where we are planning to go in the production chain — from a concentrate of apatite to a concentrate of rare earth oxide, and then to separate those oxides from each other, and then to sell those. We are going through all steps to produce the magnet.
The plan is for REEtec's first factory, in Heroya, Norway, to be ready by the second half of 2024, and for a second factory, planned for 2026, that can process material from LKAB that will be available as of 2027.
Are there any offtake agreements already on the table?
No, not yet. At the moment we are discussing with a lot of people, but it is still a little bit early days. We need to get the process finalised and well-established. We need to get the land in order to put all the processing plants. We need a special area in Port Lulea to be able to ship the goods. But we have a lot of interest [for both rare earth and phosphorus]. For instance, there is a farming association in Sweden very interested in this because now they are buying phosphorus [to make fertilisers] but it's coming from all over the place, but they also have a cadmium issue.
Would mining in Europe help pave the way towards electrification?
In this transformation towards electrification, electric cars, electric trucks, and all of that, we will have to produce more electricity. In Sweden it is not possible to increase hydroelectricity production because that has been built out completely. We can still build wind farms, but to do those you will need rare earth permanent magnets. Then you can go also towards nuclear electricity production. Sweden has a fair bit of that and there are plans maybe to start building some new plants that require rare earth elements.
So, we do see a need for these different materials going forward and if we don't produce them in Europe — at least a certain amount of it — we will be again completely dependent, as we are today, on other parts of the world. And that is a big weakness.
