Sweden Uncovers Massive Rare Earth Deposit, But There's A Catch

As the world moves towards a greener future, the demand for rare earth elements (REEs) continues to soar. These elements are critical to the production of many green technologies, including electric vehicles, wind turbine generators, solar panels, and even smartphones. Unfortunately, the global production of REEs is dominated by China, giving them significant leverage over pricing and potential to restrict supplies to rivals. But now, a major discovery by LKAB, a state-owned mining company in Sweden, could change that.

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REEs are a group of 17 elements that are typically found together in the earth's crust. They have unique magnetic and electrical properties that make them essential to cutting-edge technologies. For example, neodymium is used to make powerful magnets, which are critical to the operation of electric vehicles and wind turbines. Dysprosium is used to stabilize the operation of wind turbines at high temperatures. And europium is used in the production of LCD screens, including those used in smartphones.

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LKAB has found Europe's largest known deposit of REEs, estimated at over a million tons, in a far northern part of the country within the Arctic Circle. This discovery offers a significant opportunity for Europe to develop a domestic source of these essential minerals. "This is good news, not only for LKAB, the region, and the Swedish people, but also for Europe and the climate," says Jan Mostrom, the company's CEO.

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The process of extracting REEs from the earth is complex and can take a long time. The most common method of extraction is through open-pit mining, which involves removing large amounts of overburden to reach the ore deposit. The ore is then crushed and ground to a fine powder, which is then typically leached with a weak acid to dissolve the REEs. The REEs are then separated from the other elements using a variety of chemical processes. The process of refining REEs can produce radioactive contaminants, which is why the process must be carried out with the utmost care.

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LKAB plans to pursue a careful process that will eventually provide Northern Europe with the ability to extract and process REEs. "We want to have the whole value chain," says David Hognelid, LKAB's chief strategy officer. To help achieve this goal, LKAB recently became the largest shareholder in a Norwegian company, REEtec, that specializes in separating out the REEs using more environmentally friendly processes. The plan is to have REEtec eventually build a plant in Sweden. However, before that can happen, LKAB must further assess the resources.

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While the discovery is certainly promising, investors should be aware that the process of extracting and refining REEs can take a long time, with LKAB estimating that it could take 10 to 15 years or more before the metals are delivered to market. Additionally, European permitting procedures for mining can be lengthy, which may hinder the development of the deposit.

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Despite these challenges, the potential for a domestic source of REEs in Europe is a significant opportunity for investors. As the world continues to move towards a greener future, the demand for REEs will only continue to increase, making this discovery a valuable asset for Europe and investors alike. LKAB estimates that the discovery could "meet a large part of the E.U.'s future demand" for the metals. Furthermore, Europe's domestic source of REEs will reduce dependence on other countries and decrease the risk of supply chain disruption. Investing in LKAB, a company that is not only discovering but also developing a sustainable way to extract and process REEs, is a wise decision for any investor looking to capitalize on the growth of the green economy.

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