Canadian mining company Search Minerals announced on Tuesday a “critical” Rare Earth Element (REE) discovery in the eastern province of Labrador. Called Deepwater Fox, this is the second major find in the Port Hope Simpson REE area, which stretches 62km long and up to 8km wide on Labrador’s southeastern coast. Search Minerals owns the area completely, and besides Foxtrot, its original major REE discovery in 2010, 22 other sites within it have been either discovered or “outlined” for upcoming prospecting.
The REE-bearing minerals at Deepwater Fox are believed to be similar to those at Foxtrot (mainly allanite and fergusonite). However, the REE composition of this new find is higher and the length of its surface exposure is roughly triple that of Foxtrot, generating tremendous excitement.
The geographic setup is also very economically advantageous for ramping up future production. Deepwater Fox is located just 2km away from the airport of St. Lewis as well as its ice-free deep water port (near trans-Atlantic shipping lanes), and the Trans-Labrador highway connects to the North American road network.
A major REE mining effort will help sustain economic growth in Labrador, which was economically-depressed after the collapse of its cod-fishing industry in the early 1990s but has been experiencing a broader mining and energy boom since the 2000s. Search Minerals aims to develop many shallow open pit mines, with low operating and capital costs, that will feed into its own scalable metallurgical processing plant in southeast Labrador.
Three communities are within 50km of Deepwater Fox, and they will benefit from the influx of workers and capital that will accompany future exploration and production of REE. The area is mostly indigenous-populated, but there are very friendly relations between the company and the NunatuKavut Community Council (NCC), which represents the 6,000 Inuit of southern Labrador. Both parties signed a mutually beneficial Exploration Activities Agreement in 2012, which continues indefinitely unless one or both choose to terminate it. The agreement covers safeguards for the environment and things of historical importance, as well as hiring and other business opportunities for NunatuKavut members. It also gives the Inuit a stake in the success of the company, as Search Minerals makes “an annual good faith payment to NCC of a small cash stipend and 50,000 common shares.”
Canada is a recent arrival on the global stage of REE production, with so-far negligible production relative to the heavyweights. China had a near monopoly for many years, providing 97% of global demand between 2005-2010, but its market share is slipping as other countries expand their output. China’s share dropped to 86% in 2013, and is expected to fall to 75% in 2015, according to an Asia Briefing article. If Search Minerals’ Labrador projects can be scaled up, it will accelerate Canada’s trajectory to join the ranks of the U.S., Australia, Russia, India, and Brazil as a small but influential player in the lucrative and geostrategic REE game.