The company says it will focus on its Nechalacho rare earth mining project in the Northwest Territories
Two years after Vital Metals began constructing its rare processing facility in Saskatoon, it is getting out of the business. The move is a setback to Saskatchewan’s hopes of becoming a key player in Canada’s EV battery supply chain.
Vital Metals is an Australia-based company. It has put the subsidiary that owns the rare earth processing facility, Vital Metals Canada Ltd., into receivership. The announcement follows a disclosure from Vital saying the cost of the plant ballooned to nearly $60 million. It was originally estimated to cost $20 million. At the time of the receivership announcement, Vital had already sunk at least $18 million into the half-built plant.
“In summary we’ve demonstrated really that the Saskatoon facility doesn’t make economic sense for us to operate, so we’ve decided to terminate that facility,” said Richard Crookes, Vital’s interim chairman in a video statement.
Instead of processing rare earth metals, Vital says it will exclusively focus its Canadian efforts on developing its existing Nechalacho rare earth deposit in the Northwest Territories through its other subsidiary, Cheetah Resources. Vital’s decision follows months of uncertainty over both projects and a strategic review the company conducted between April and mid-July.
A supply chain hiccup
Only a year ago, Vital’s Saskatoon processing facility was hailed as one of two key milestones in transforming Saskatchewan into a North American supply hub for the critical rare earth elements needed to manufacture electronics, clean energy, automotive and aerospace technologies.
The other is the Saskatchewan Research Council’s $55-million rare earth processing facility, which is under construction. It is expected to be operational by 2024.
When Vital began construction of its Saskatoon facility in 2021, everything seemed lined up for success. The facility was to meet a growing demand for an alternative rare earth supply. China currently dominates the sector.
Vital commissioned a three-year, small-scale demonstration mine at one of Nechalacho’s deposits, called North T. Over a five-month period, it mined 58,000 tonnes of ore from the North T pit. The company had a customer lined up for its rare earth concentrate after signing an offtake agreement with Norway’s REEtec, which is constructing its first industrial plant in Porsgrunn, Norway. The plant will produce battery-grade product, expected to be completed in 2024. REEtec celebrated the deal with Vital as an important step in it becoming a leading European rare earth producer.
Until the REEtec agreement kicked off in 2024, Vital planned to sell its processed product on the market. In 2022, Vital shipped its first load of rare earth material from its mine to its Saskatoon plant. But the company faced “a lack of immediate market for our product and lower rare earth prices,” said Crookes.
Now, Vital has cancelled its offtake agreement with REEtec, saying the terms puts Vital under undue hardship due to conditions out of its control. (REEtec disagrees and has reserved its rights to arbitration proceedings.)
Reimagining Vital’s role
In his video statement, Crookes says Vital will now focus on developing its Nechalacho’s Tardiff deposit, one of the world’s largest rare earth deposits.
“It’s very large, high grade, shallow open pittable, with great metallurgical characteristics,” he said. “So we think there’s some superb value there to be captured by progressing that project towards development.”
Vital plans to resume crushing and sorting the ore it stockpiled during its 2021 North T pit mining campaign in May 2024. The company said it may conduct another mining campaign in the future.
Meanwhile, whether or not Vital’s Saskatoon facility will be picked up by another company remains unknown.
The first creditors’ meeting for Vital Metals Canada Ltd. is happening on October 16. On the other hand, the other key milestone in advancing Saskatchewan as a rare earth hub — the Saskatchewan Research Council’s Rare Earth Processing Facility — remains on budget and on track for being fully operational by the end of 2024.
In April, when Vital’s struggles became public, SRC issued a statement saying, “To confirm, SRC is not connected in any way with that third-party company. SRC’s Rare Earth Processing Facility will produce high value rare earth elements (REEs) and magnet metals using REE minerals and will operate in the mid-stream supply chain. SRC is not a mining company, nor does it have commercial interests in mining operations. The REE facility has been designed to be vertically integrated specifically to withstand short- and medium-term market volatility.”