Editorial | The economics of red mud

It is exciting news that Bobby Stewart’s minerals exploration outfit, Geophysx Jamaica, is moving towards new testing of the feasibility of extracting rare earth elements (REE) from red mud, the effluent left when bauxite is refined into alumina.

The development reminds of the suggestion by this newspaper over a year ago that Jamaica rethink how it prices its bauxite, especially when mined for export, and who owns any minerals left in the waste after it has been mined and processed. These matters should be clearly set out in the law.

Mr Stewart’s red mud initiative suggests a belief that he is on to technology that is more advanced than the process employed a decade ago by a joint venture between the Jamaica Bauxite Institute (JBI) and Japan’s Nippon Light Metals (NLM), hoping to achieve the same end. They came up short.

Apparently, it was not that the JBI-NLM research consortium could not deliver REEs. They could not compete with traditional mining operations for the metals.

Importantly, Geophysx’s move is the kind of competition in research and development that helps to transform economies, of which there is too little in Jamaica. That is why this effort is worthy of celebration. Its success could have substantial economic value.

STRATEGIC IMPORTANCE

Rare earth elements are a group of 17 minerals that are not exactly rare. They, however, are not often found in concentrated quantities in a single place to make their mining commercially viable. Yet, the strategic importance of the minerals – used in everything from consumer electronics to military systems and batteries that power electric vehicles – has grown in recent years. It will be even more so in the coming years.

China mines approximately 60 per cent of the world’s supply of REEs and accounts for nearly 40 per cent of the known reserves – facts that greatly concern the United States, given Washington’s aim of limiting Beijing’s rise as a global economic and geopolitical competitor. The United States, with less than three per cent of known REE reserves, has been vigorously encouraging American firms to mine the minerals at home and in ‘friendly’ countries. Efforts have also been made in the Congress to ban the US military from using Chinese rare earth elements in its projects.

The matter has been further complicated by the Russia-Ukraine war and efforts by the West, led by the United States, to cripple Russia’s economy – including, presumably, on REEs. Before the war, Russia produced about one per cent of rare earth minerals, but had proposed a ramping-up output.

This backdrop adds significance to a project like that planned by Geophysx.

It has long been known that bauxite contains minerals other than aluminium, for which it is primarily mined, and that REEs could be found in the slurry that is left after the production of alumina, the mineral that is turned into the metal.

The problem has been how to economically extract these REEs from the so-called red mud, which is usually stored in large ponds near alumina refineries. That was what NLM and the JBI set out to do – unsuccessfully apparently – when they established a research laboratory in Kingston in 2013. The specific outcomes of their research have not been publicly disclosed.

JOINT VENTURE

However, in 2020, DADA Holdings, the predecessor parent of Atlantic Alumina Company, announced a joint venture with a Canadian green energy firm, Enervoxa, for the commercial mining of REEs from 35 million tonnes of red mud at Atlantic’s refinery in Gramercy, Louisiana. The intention was to employ what was said to be Enervoxa’s proprietary technology.

Significantly, the effluent, and any REEs contained in it, is from bauxite shipped from Jamaica over decades by a company now called Discovery Bauxite. The company, ultimately, is a joint venture between the Jamaican government and Atlantic Alumina’s current owner, Concord Resources.

Jamaica, as we noted previously, cannot retroactively charge royalties on the other minerals in the bauxite exported over the past half-century. But it can start now by placing a differential on the royalties and taxes – including the bauxite production levy – on ore destined for export, as opposed to that mined for refining domestically.

Mr Stewart, whose company has over 70 licences to prospect for minerals across Jamaica, said some of those licences “cover the major red mud lakes in Jamaica”.

It is not clear whether these are arrangements between Geophysx and the alumina refiners, including UC Rusal – whose largest shareholder is the sanctioned Russian Oleg Deripaska – and China’s Jiuquan Iron and Steel Company, owners of the island’s largest alumina refinery, Alpart.

Jamaica’s Mining Act does not specifically, or with clarity, address what might be considered a secondary mineral, for which a prospector, or a mining, production or handling company, would not have received licences. The law is clear, prospecting licences are for specific minerals and place a burden on licensees to report “forthwith” to the authorities the discovery of any minerals not covered by their licences.

Good order and changed circumstances – not the least advances in technology – require that secondary rights, such as what happens with the exploration of red mud lakes, be made clear in law.