Rare Element Resources Ltd. says double-digit inflation and construction delays have postponed the July opening of its novel rare earth minerals demonstration plant being built in Upton, Wyoming, by at least two months.
Inflation, which has skyrocketed about 18% since 2020, is largely to blame, the company said.
In a statement issued Monday, Rare Element Resources said inflation and other design changes led the Canadian-based company to request a little more than $9 million in additional money for the Department of Energy-backed project.
That’s roughly 21% higher than the original project’s cost of $44 million.
“Inflation is inflation. We are fully prepared to see it out, and it’s a sad reality,” CEO and President Ken Mushinski told Cowboy State Daily.
“We hope to startup on Sept. 1 pending the proper approvals from the Department of Energy and others. We don’t anticipate any more delays at this point,” he said.
The original startup date for the demonstration plant designed to counter China’s dominance in the sector had been set for later this month.
The demonstration-scale processing plant, which was unveiled in a groundbreaking ceremony last fall, is pioneering a new, more efficient method to extract rare earths.
The rare earth minerals bonanza is the result of consumers starved for magnet metals integral to the green transition to electric vehicles, wind turbines, consumer goods, robots and military drones, missiles and chips needed for sophisticated computing power.
Besides being backed by a 70.6% stake from privately held military contractor General Atomics of San Diego, a builder of huge drones and other high-tech gadgetry, Rare Element Resources has received $21.9 million in financial support from the DOE’s Advanced Materials and Manufacturing Technologies Office, a matching amount from the company, and a $4.4 million grant from the Wyoming Energy Authority.
More Money Needed
As part of the DOE cost-share agreement for the plant construction and operations, the project team, led by General Atomics, submitted to the DOE an updated construction and operations budget for its approval.
DOE approval is anticipated by Sept. 1, the project-established date to begin the operating phase of the plant.
Updated estimates were included in the budget to address increased costs because of inflationary pressures on labor and equipment, as well as incorporating changes in the plant’s engineering and design.
On the project team’s behalf, General Atomics submitted a total project budget of $53.6 million, which is roughly $9.6 million higher than the original budget of $44 million.
“The DOE is aware of the extraordinary inflationary pressures that have occurred since the project budget was initially estimated in 2021, and we are hopeful the DOE will contribute further cost-share funds to offset the increased financial costs of the project,” Mushinski said.
“While we focus on the important next steps, including confirming a final budget and schedule with the DOE, we are pleased with the efforts and dedication of our partners in this project, including their subcontractors, which have led to the progress achieved thus far, and we look forward to the timely commencement of operations,” he added.
Progress is moving forward on the plant’s construction.
Rare Element Resources also disclosed this week that a Gillette, Wyoming, unit of Westminster, Colorado-based Loenbro LLC has either completed infrastructure and earth moving upgrades for site preparation of the Upton plant or has “progressed to near completion.”
New Kid On The Block
Mushinski joined Rare Element Resources in May, replacing Brent Berg the top executive behind development of the rare earth minerals project in northeastern Wyoming.
Berg left the company for another Wyoming operation with big aspirations for uranium development.
Berg joined Uranium Energy Corp., a Corpus Christi, Texas-based uranium business that has plans to restart uranium production at its Irigaray central processing plant and satellite Christensen Ranch facility, both located in the Powder River Basin.
In his new role, Berg becomes senior vice president in charge of U.S. operations with Uranium Energy, working with longtime uranium expert Donna Wichers, vice president of Wyoming operations.
Pat Maio can be reached at pat@cowboystatedaily.com.
