Ionic Rare Earths - Visiting the Magnet Recycling Plant in Belfast

• Ionic Rare Earths, through its UK subsidiary Ionic Technologies is commercializing magnet recycling technology in Belfast, focusing on extracting and separating rare earth elements from end-of-life magnets and manufacturing waste.
• The company's technology can separate individual rare earth oxides, particularly the valuable heavy rare earths dysprosium and terbium, giving them a unique competitive advantage.
• They aim to have a commercial-scale facility operational in Belfast by the end of 2026, with plans to expand globally through partnerships and licensing.
• The company is well-positioned to capitalize on growing demand for rare earth recycling, driven by government policies like the EU's Critical Raw Materials Act.
• Ionic Technologies is targeting high-margin, supply-critical sectors like defense and high-performance magnets, aiming to create a closed-loop supply chain independent of China.

Pioneering Rare Earth Recycling for a Sustainable Future

Ionic Rare Earths Limited is emerging as a key player in rare earth elements (REE) mining, refining and recycling industry, positioning itself to address the growing global demand for these essential materials outside of China's dominant supply chain.

Through its UK subsidiary, Ionic Technologies International Limited, the company has developed innovative processes for extracting and separating REEs from both mining ore concentrates and recycled permanent magnets. With a focus on commercializing this technology, Ionic Technologies aims to achieve near-complete extraction of valuable rare earth elements from end-of-life magnets and manufacturing waste. The result is high-value, separated, and traceable magnet rare earth products with purities exceeding 99.9% rare earth oxide (REO). This groundbreaking approach positions Ionic Technologies to play a crucial role in the sustainable supply of critical rare earth elements, addressing growing global demand while reducing reliance on traditional mining practices.

We recently visited the Ionic Technologies demonstration plant in Belfast to see how the team are progressing.

On-Site Interview with MD, Tim Harrison & Chairman Brett Lynch

The Rare Earth Challenge

Rare earth elements are crucial components in a wide range of modern technologies, from smartphones and electric vehicles to wind turbines and defense systems. However, the global supply chain for these materials is heavily concentrated in China, raising concerns about supply security and geopolitical risks. As governments and industries worldwide seek to diversify their sources of rare earths, recycling has emerged as a promising solution.

Ionic's Technological Edge

At the heart of Ionic Technologies' value proposition is its proprietary technology for recycling rare earth magnets. Developed at Queen's University Belfast and acquired by the company in 2022, this technology allows for the extraction and separation of individual rare earth oxides from end-of-life magnets and manufacturing waste.

Tim Harrison, Managing Director of Ionic Technologies, explains the significance of their approach:

"We're the first to do this, and we now provide a mechanism to unlock what is a latent opportunity here in the UK, Europe and North America."

The company's technology focuses particularly on four key elements: praseodymium, neodymium, terbium, and dysprosium. These elements, especially the heavy rare earths terbium and dysprosium, command high prices in the market due to their critical applications and limited supply.

Commercial Progress & Scalability

Ionic Technologies has made significant strides in scaling up its technology. The company currently operates a demonstration plant in Belfast capable of processing 30 tonnes of magnets per annum, producing 10 tonnes of separated magnet rare earth oxides. This practical demonstration of the technology at scale is a crucial step in proving its commercial viability.

The next phase of development involves the construction of a commercial-scale facility in Belfast Harbor. With a target completion date of end-2026, this facility will serve as the cornerstone of Ionic Technologies' operations and a model for potential global expansion.

Brett Lynch, Chairman of Ionic Rare Earths, emphasizes the company's strategic positioning:

"We are looking as a business to create a closed loop between magnet manufacturers, alloy manufacturers, and now ourselves, a recycling company that can do the complete split of rare earths."

The Demonstration Plant: A Glimpse into Ionic Technologies' Process

At the heart of Ionic Technologies' operations is its demonstration plant in Belfast, where the company's innovative rare earth recycling technology is being scaled up and refined. Fergal Coleman, Head of Technology at Ionic Technologies, provides insight into the process that transforms end-of-life magnets into high-purity rare earth oxides.

The journey begins with the crushing and grinding of magnets into a fine powder, which is then digested in a strong acid solution. Through a series of precipitations and purification steps, a mixed rare earth oxide product is generated. This mixture is then fed into a separation circuit that distinguishes between light and heavy rare earth elements. The process continues with further separation to isolate individual elements like dysprosium and terbium. The final steps involve converting these separated elements into oxalates and then calcining them to produce the final product: high-purity rare earth oxides. This demonstration plant, capable of processing 30 tonnes of magnets per year, serves as a crucial proving ground for Ionic Technologies' recycling process, paving the way for full-scale commercial operations.

Scaling Up: Ionic Technologies' Commercial Plant Vision

Building on its success with the demonstration plant, Ionic Technologies is taking bold steps towards full-scale commercial operations. Managing Director Tim Harrison, provides insights into the company's ambitious plans for a commercial recycling facility in Belfast's historic Queen's Island area.

A Strategic Location

The chosen site for the commercial plant is a 12-acre plot in the former Harland & Wolff shipyards, an area steeped in industrial heritage and now at the heart of Belfast's urban regeneration. This location is not just symbolic; it's strategic. Harrison explains, "We're working through the approvals and permitting for this site to be the home of our first recycling plant here in Belfast."

Ambitious Production Goals

The planned facility represents a significant scaling up of Ionic Technologies' operations. Harrison outlines the scope:

"We're working on the feasibility study for a magnet recycling plant that can recycle 1200 tonnes per annum of magnets to produce 400 tonnes of separated magnet rare earth oxides."

This production capacity would position the company as a major player in the rare earth recycling industry.

Government Support & Fast-Tracking

The project has garnered substantial support from local and national government bodies. Harrison notes: 

"We've got an indication that we've got a lot of support on fast-tracking the approvals process for the commercial plant here."

This support extends beyond regulatory assistance to potential financial backing, with Harrison mentioning "various pots of funding and government departments who are fully supportive of what we're doing here in Northern Ireland."

Integrating into the Green Ecosystem

The commercial plant is set to become an integral part of Belfast's emerging green technology hub. With wind turbine manufacturing facilities nearby, Ionic Technologies is well-positioned to contribute to and benefit from the local renewable energy ecosystem. Harrison sees this as a unique opportunity: "Sometimes you can be smart in life and lucky. I think we're a mix of both."

Timeline & Future Prospects

The company is moving swiftly towards realizing its vision. Harrison outlines the timeline:

"We anticipate and we're aiming to be completing the investment decision by the end of this year and we want to be up in production in 2026."

This rapid progression underscores the urgency and demand for secure, traceable supplies of rare earth elements outside of China.

Beyond Belfast

While focusing on the Belfast facility, Ionic Technologies is not limiting its vision to a single location. Harrison views this as "the first of many recycling plants as we look at scaling, scaling geographically." This approach aligns with the company's licensing optionality, potentially allowing for expansion into European markets and beyond.

By establishing this commercial plant, Ionic Technologies is not just scaling up its operations; it's positioning itself as a key player in the global rare earth recycling industry, with the potential to significantly impact the supply chain for these critical materials.

Rare Earth Recycling: A Critical Component of the Green Energy Transition

The recycling of rare earth elements is emerging as a crucial strategy in the global push towards sustainable energy and electric vehicle adoption. Thomas Kelly, Director of Operations at Ionic Technologies, provides valuable insights into the importance of this process and its potential impact on various industries.

Recycling Rare Earths from Wind Turbines

Kelly highlights the significance of rare earth magnets in wind turbines, noting that while these magnets represent only about 1% of a turbine's mass, they account for approximately 45% of its value. This underscores the economic potential of recycling rare earth elements from decommissioned wind turbines and other sources.

Supporting the Automotive Industry's Green Transition

The UK government has set an ambitious target to decarbonize all vehicles by 2035. Ionic Technologies' work is directly supporting this goal by providing a critical component for the electric vehicle supply chain. Kelly explains:

"We support that because we're able to provide an absolutely critical component part of the picture with respect to magnet manufacturing and magnets are essential for EV motors."

Meeting Recycling Targets

The European Union has set a target requiring 25% of rare earth materials used in manufacturing to come from recycled sources. Currently, global recycling rates for rare earths are around 1%, indicating significant room for growth. Ionic Technologies aims to help meet this target by rapidly scaling up its recycling operations.

Kelly states:

"From an Ionic Technologies perspective, we want to move quicker than that. We see an opportunity here, we see feedstock, see material that could be recycled domestically being sent abroad to be processed, given the fact that there is a real criticality around this material, is not a comfortable position for anyone."

High-Quality Recycled Products

One key advantage of Ionic Technologies' process is the high quality of the recycled rare earth oxides it produces. Kelly emphasizes that their recycled products are comparable to virgin materials in terms of compositional analysis, making them suitable for use in high-specification applications. This quality assurance is crucial for gaining the trust and interest of magnet manufacturers and other potential customers in the supply chain.

By focusing on rare earth recycling, Ionic Technologies is not only addressing critical supply chain issues but also contributing to the circular economy and reducing the environmental impact associated with rare earth mining. As the demand for rare earth elements continues to grow in various green technologies, the company's recycling capabilities position it as a key player in the sustainable rare earth supply chain.

Competitive Advantage & Market Positioning

Ionic Technologies distinguishes itself from competitors in several key ways:

• Full Separation Capability: Unlike many recycling companies that produce mixed rare earth products, Ionic Technologies can separate individual rare earth oxides, allowing for higher-value end products.
• Focus on High-Value Elements: By concentrating on the most valuable and in-demand rare earths, the company maximizes its potential profit margins.
• Closed-Loop Strategy: The company aims to create integrated partnerships with magnet and alloy manufacturers, ensuring a secure supply chain independent of Chinese inputs.
• First-Mover Advantage: As one of the first companies to demonstrate this level of separation capability at scale, Ionic Technologies is well-positioned to set industry standards and secure key partnerships.

Belfast: A Hub for Green Innovation & Urban Regeneration

Ionic Technologies' decision to establish its operations in Belfast is far from coincidental. The city is experiencing a remarkable transformation, positioning itself as a hub for green innovation and sustainable technologies. Tim Harrison, Managing Director of Ionic Technologies, provides insights into why Belfast is an ideal location for the company's groundbreaking rare earth recycling operations.

Urban Regeneration & Green Ecosystem

Belfast is undergoing significant urban regeneration, evident from the numerous construction projects visible across the city's skyline. This redevelopment is part of a broader strategy to create a green ecosystem, attracting businesses focused on sustainable technologies and net-zero solutions. Harrison notes:

"We are a net zero enabling business, right? We are part of the renewable energy thematic."

The city is actively developing a green energy park, which includes companies working on various sustainable technologies. From hydrogen production to electric boat manufacturing, Belfast is cultivating a diverse range of green industries. Ionic Technologies' rare earth recycling technology fits perfectly into this ecosystem, particularly in supporting the offshore wind energy sector that the city is nurturing.

Government Support & Strategic Alignment

The company's presence in Belfast is strongly supported by both local and national government initiatives. Harrison explains:

"We've had tremendous success and engagement with local stakeholders here and government through both local Northern Ireland stakeholders, but also UK government."

This support is crucial, as Ionic Technologies' operations align with several key government objectives, including the development of critical raw materials, enhancing sovereign capabilities, and enabling the transition to net-zero emissions.

Talent Retention & Economic Growth

One of Belfast's key objectives is to create high-paying jobs that can retain the city's highly educated workforce. Harrison points out:

"What they're really looking for is to create high paying good [jobs] for a very very educated talent pool here in Northern Ireland which typically is having to look at moving into other areas to follow employment opportunities."

By attracting companies like Ionic Technologies, Belfast aims to change its economic landscape and focus on value addition and advanced manufacturing.

By choosing Belfast as its base of operations, Ionic Technologies is benefiting from the city's supportive ecosystem and talented workforce and contributing to its vision of becoming a leading center for sustainable technology and green innovation. The company's presence reinforces the city's growing reputation as a hub for cutting-edge, environmentally-conscious industries.

Financial Considerations & Business Model

Ionic Technologies' business model offers several attractive features for investors:

• Capital-Light Approach: Compared to traditional rare earth mining operations, the company's recycling focus requires significantly less upfront capital investment.
• Potential for High Margins: The ability to produce high-purity, separated rare earth oxides allows for premium pricing, especially for critical elements like dysprosium and terbium.
• Multiple Revenue Streams: The company's strategy includes potential for direct production, joint ventures, and technology licensing, providing diverse income sources and scalability.
• Government Support: The strategic importance of rare earth recycling has attracted government interest, potentially opening doors for grants, incentives, and supportive policies.

Challenges & Risks

While the opportunity is significant, investors should be aware of potential challenges:

• Technology Scaling: Successfully scaling the technology to commercial levels will be crucial for the company's success.
• Market Competition: Although currently ahead, the company may face increased competition as the rare earth recycling market develops.
• Price Volatility: Rare earth prices can be volatile, potentially impacting profitability.
• Geopolitical Factors: Changes in global trade policies or actions by major producers like China could affect market dynamics.

Global Expansion Potential

Ionic Technologies sees significant opportunities for global expansion beyond its initial Belfast facility. The company is in discussions with potential partners in North America and Europe, exploring opportunities for technology licensing and joint ventures.

This expansion strategy aligns well with the growing global interest in securing domestic rare earth supply chains. As Brett Lynch notes:

"We're in discussions around the world, in North America, specifically the US, looking at Canada, countries in Europe all have very similar now geopolitical and manufacturing requirements that need that type of security or supply and the quality control around what they're looking for high-performance maintenance."

Partnerships & Industry Collaboration

Ionic Technologies is actively engaging with potential partners across the rare earth value chain. The company has already established partnerships with LCM and Ford, demonstrating the industry interest in its technology.

These collaborations are crucial not only for validating the company's technology but also for securing future customers and potentially accessing additional funding or resources for expansion.

The Investment Thesis for Ionic Rare Earths

• First-mover advantage in rare earth magnet recycling with proprietary separation technology
• Focus on high-value, high-demand elements (dysprosium, terbium) for maximum profit potential
• Capital-light business model compared to traditional rare earth mining operations
• Multiple potential revenue streams: direct production, joint ventures, and technology licensing
• Strong regulatory tailwinds, particularly in Europe and North America
• Potential for high margins due to ability to produce high-purity separated oxides
• Alignment with ESG trends and critical material security concerns
• Scalable technology with global expansion potential
• Strategic partnerships already in place with major industry players
• Government support and potential for grants/incentives in strategic locations

Ionic Rare Earths presents a unique investment opportunity in the critical materials sector, leveraging advanced recycling technology to address the growing demand for secure and sustainable rare earth supplies. The company's focus on high-value elements, capital-light business model, and potential for global expansion position it well to capitalize on regulatory tailwinds and industry trends. While challenges remain, including technology scaling and market competition, Ionic Rare Earths' first-mover advantage and strategic partnerships provide a strong foundation for potential growth. Investors should closely monitor the company's progress in commercializing its technology and expanding its operations, as well as broader developments in the rare earth market and regulatory landscape.

Macro Thematic Analysis

The rise of Ionic Rare Earths is set against a backdrop of significant macro trends reshaping the global rare earth elements (REE) market. Central to this shift is the growing recognition of REEs as critical materials essential for the transition to green technologies and advanced manufacturing. As countries worldwide accelerate their adoption of electric vehicles, wind turbines, and other clean energy technologies, the demand for rare earths is projected to surge.

Simultaneously, there's an increasing focus on supply chain security and diversification. China's dominance in the rare earth market has raised concerns among Western nations about potential supply disruptions and geopolitical leverage. This has spurred initiatives in Europe, North America, and other regions to develop domestic rare earth capabilities, including recycling.

The circular economy concept is gaining traction globally, with governments and industries seeking ways to reduce waste and maximize resource efficiency. Rare earth recycling aligns perfectly with this trend, offering a more sustainable alternative to traditional mining practices.

Regulatory frameworks are evolving to support these shifts. The European Union's Critical Raw Materials Act, setting targets for recycled rare earths, exemplifies the policy support emerging in this sector. Similar initiatives are under consideration in other jurisdictions, potentially creating a favorable regulatory environment for companies like Ionic Rare Earths.

The convergence of these factors – rising demand, supply security concerns, sustainability imperatives, and supportive policies – creates a potent opportunity for rare earth recycling technologies. As Brett Lynch aptly summarizes:

"We provide that technology to make that happen for the first time. I think that's kind of scary for me. If you're from 1% to 25% and by the way, that 25% number as an absolute number is of a much bigger number by 2030 presumably as well."

This quote encapsulates the scale of the opportunity in rare earth recycling, highlighting both the current underdevelopment of the sector and its potential for rapid growth.