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Ucore Receives US$1.8 Million DoD Payment to Build North American Rare Earths Supply Chain

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December 18, 2024
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Ucore Receives US$1.8 Million DoD Payment to Build North American Rare Earths Supply Chain
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Critical minerals company Ucore Rare Metals (TSXV:UCU,OTCQX:UURAF) announced the receipt of a US$1.8 million payment from the US Department of Defense (DoD) on December 13.

The funding will support Ucore’s subsidiary, Innovation Metals, in demonstrating its RapidSX rare earths separation technology at a commercial demonstration facility in Kingston, Ontario.

This effort forms part of a broader initiative to establish a sustainable rare earths supply chain in North America, a key step in moving away from foreign sources for these essential materials.

With the US$1.8 million in hand, Ucore has now been awarded a total of US$2.3 million by the Department of Defense. The funds come under a US$4 million other transaction agreement announced in June 2023.

Ucore is focused on two main objectives: showcasing the commercial viability of its separation technology, and enhancing the establishment of domestic processing facilities for heavy and light rare earth elements.

The company’s December 13 release also outlines modifications to its Department of Defense deal.

These modifications are centered on aligning payment milestones with Ucore’s strategic objectives, including operating its demonstration plant for 2,600 operational hours in a simulated commercial environment, and thousands of hours of conventional solvent extraction pilot operations for comparative analysis.

Combating China’s rare earths dominance

Rare earths, used in electric vehicles, wind turbines and defense systems, are critical to modern industries.

However, China has long dominated the global supply chain for these critical minerals, controlling about 85 percent of the processing capacity and 90 percent of the rare earth magnet market. These magnets are essential in various advanced technologies, including missile guidance systems and military aircraft.

The National Defense Authorization Act of 2024 underscores the strategic importance of rare earths, with provisions banning the use of rare earth imports from China in the defense sector beginning in January 2027.

This legislative move highlights the urgency of building domestic supply chain solutions to mitigate the risks associated with dependence on a single foreign source of these materials.

Ucore’s initiatives aim to disrupt China’s rare earths supply chain dominance by creating sustainable processing infrastructure in the US and Canada. Currently the company is developing a heavy and light rare earths processing facility in Louisiana, is planning to expand with complexes in Canada and Alaska.

Long-term plans include the development of its Bokan-Dotson Ridge heavy rare earths project in Alaska.

In collaboration with the Canadian government, Ucore is also working on a C$4.28 million light rare earth demonstration project, which is scheduled for completion by mid-2025.

Challenges in building domestic REE infrastructure

The US and its allies face significant barriers in competing with China’s rare earth industry.

While countries like the US possess substantial reserves of rare earth elements, processing them domestically remains a challenge. China’s state-backed infrastructure and vertically integrated operations allow the Asian nation to maintain lower production costs and market dominance in the sector.

Efforts to rebuild domestic capabilities require substantial investment and technological innovation.

Even the Mountain Pass mine in California, operated by MP Materials (NYSE:MP), shows how the US relies on foreign infrastructure for processing, as raw materials from the site are still sent to China for refinement.

Ucore’s RapidSX technology, which combines traditional solvent extraction with advanced engineering, is designed to address these challenges. By streamlining the separation process, the company is aiming to make domestic processing of rare earths more efficient and economically viable.

Since 2020, the Department of Defense has allocated over US$439 million to rare earths companies for developing mining, processing and manufacturing capabilities

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.

This post appeared first on investingnews.com

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