Construction of Saskatoon rare earths processing plant put on pause

Regina -

Canada's only rare earths mining company is pausing all construction at its Saskatoon processing facility.

Vital Metals said in a news release Wednesday the pause will allow the company to conserve cash and seek other sources of funding to potentially build a sustainable business model for the facility.

The company had planned to complete a calcine circuit that would produce an intermediate rare earths oxide product for potential sale to a third party, but it said it has been unable to secure such sales on "commercially satisfactory terms."

It said a review of the economic viability of mining and processing ore at North T, a deposit in the Northwest Territories, has indicated "the scale of operations and associated unit operating costs will not achieve positive cashflow from the project."

The company said it intends to retain Saskatoon employees as it conducts a strategic review, which is expected to take three months.

Prior to pausing construction, Vital Metals had deferred plans to complete circuits that dealt with rare earth hydrometallurgical leaching, purification and precipitation.

The company has spent roughly $19.7 million on the Saskatoon facility, which is half built.

• Get the CTV News app for Saskatchewan breaking news alerts and top stories 

Richard Crookes, Vital's interim chairman, said the company has been experiencing increased costs and low rare earth prices.

He added the company has been unable to find an immediate market for the products.

"There is no economic imperative to complete this demonstration project at the current time; however the Saskatoon processing facility can provide valuable intermediate processing capacity for a downstream rare earth hub in Saskatchewan," Crookes said in the news release.

"North America needs independent downstream processing to further enable the transition to the green economy and Vital is looking forward to working with like-minded parties to deliver a completed project."

Prime Minister Justin Trudeau toured the plant in January to promote critical minerals as being key for clean energy technologies.

While pausing the construction raises questions about the future of critical minerals in Saskatchewan, some remain optimistic.

Wanda Nyirfa, vice-president of external relations at the Saskatchewan Research Council, said while she's disappointed to see construction paused, she believes Saskatchewan remains a good place to invest in critical minerals.

The Saskatchewan Research Council is a provincial Crown corporation that focuses on research and technology development.

It is currently building a rare earth process facility that aims to help spur the sector by being part of an early-stage supply chain.

"We have companies, industry and governments from around the world who are engaging with us. This supply chain is something that's unique and is going to be critical going forward in the rare earths industry globally," Nyirfa said.

Earlier this year, Saskatchewan released a critical minerals strategy that aims to double production by 2030.

The federal government has promoted critical minerals as being essential for moving toward a greener and more digitally focused economy. Ottawa has said producing more of them at home would also help avoid supply-chain disruptions.

Critical minerals include lithium, cobalt, copper, nickel, zinc and rare earth elements. They are used for batteries, solar panels, computer chips and electrical transmission lines.

This report by The Canadian Press was first published April 19, 2023.