Orbite to produce alumina, rare earths in 2013

Orbite Aluminae (ORT-T) has been busy proving that its patented technology to extract alumina from clay, bauxite and red mud — the residue left from traditional extraction processes — works on a large-scale. It plans to implement its acid-regeneration system at its high-purity alumina (HPA) plant in Cap-Chat, Que., to recover alumina and rare earths as early as 2013.

On June 28, the Montreal-based junior said it had retained CMI Chemline to complete the regeneration phase for high-purity hydrochloric acid produced at the HPA plant to separate rare-earth elements such as dysprosium, erbium and yttrium, and rare metals such as scandium and gallium.

In an interview the day before, Orbite’s president and CEO Richard Boudreault said the company previously planned to use the acid regeneration process to recover rare earths at its proposed smelter-grade alumina (SGA) plant, slated to start-up in 2014. But given the recent tests showing positive extraction rates for rare earths, Orbite is looking to implement the phase at its HPA plant, which is under construction.

In late June, Orbite said it had recovered the first commercial sample of individual rare earths from its clay deposit at the Grande-Vallée property in Quebec.

That’s an important milestone, M Partners’ analyst Marc Johnson comments in an email, “since not only is the successful extraction of individual rare earths and in particular of scandium from the shale clays a first in North America, it also demonstrates that once captured [dissolved] within the circuit, the rare-earth by-products can be recovered with little to no loss to tailings.”

Orbite reported a recovery rate of 93.9% for gallium, 93.1% for scandium and 87.5% for yttrium at an independent pilot plant in Germany. Two third parties, including European group CMI-UVK and German firm Meab, confirmed extraction rates for certain rare earth and metal oxides at over 93%.

This is a plus for the project’s economics, as the preliminary economic assessment (PEA) assumed a rare earth and metal-extraction rate of 70%.

 “It was never a matter of ‘would there be a 70% rare-earth recovery rate’ — either the process works or it doesn’t,” Johnson writes. “It’s clear now that it works very well, and will have a significant positive impact on the economics.”

While construction is underway at its HPA plant, Orbite intends to begin building its proposed SGA plant next year, with start-up scheduled for 2014.

The plant is projected to produce 540,000 tonnes of smelter-grade alumina per year and 1,097 annual tonnes of rare earths and metals at an estimated 85% recovery rate, including more than 60 tonnes of scandium oxide a year.

Scandium is a critical by-product for Orbite, Johnson says, because it contributes the most to rare-earth revenues and is complementary to alumina. Aluminum alloyed with scandium is used in a variety of military and aeronautic applications.

In addition to scandium, Orbite is targeting 100 tonnes of gallium output a year, which it says is a growing market driven by the gallium arsenide used in semiconductors.

The company aims to complete a feasibility study on the SGA plant by year-end, which will indicate the energy source and costs.  

Energy costs and access to natural gas near the project is one of the concerns that analyst Jon Hykawy at Byron Capital Markets mentions in a recent email to The Northern Miner.

“There is no natural gas available near the mine, and from what we are able to glean, the price of gas in the area is higher than what they quote in the PEA or revised PEA.”  The PEA assumed a cost of $4 per 1,000 cubic feet.

“There’s absolutely no issue with energy,” Boudreault responds. “It doesn’t necessarily have to be natural gas — it could be liquefied natural gas that is imported. We can also import coal to process it, or we can use natural gas.”

Boudreault says Hykawy — who previously raised concerns about Orbite’s working technology — has never visited the company’s facilities.  

Meanwhile Orbite is building its HPA plant, which it expects to complete by year-end, with commercial production expected in early 2013.

The plant is slated to generate 3 tonnes of high-purity alumina per day in the 12 months following commissioning. The amount of rare earths it could produce has not been disclosed.

 Also in June, Orbite signed a memorandum of understanding with India’s National Aluminum Company (Nalco), where the Asian giant will evaluate Orbite’s technology on its aluminous ores and on the red mud produced from the traditional Bayer process.

Orbite states that each tonne of alumina extracted from bauxite through the Bayer process generates two tonnes of toxic red mud as waste. While only 5% of the red mud is used in the world, the rest is stored in ponds, and if spilled, can cause substantial environmental damage.

The Montreal-based junior says its technology can be applied to extract alumina from Nalco’s bauxite without producing harmful wastes, while converting the existing red mud from operations into an environmentally neutral product.

Boudreault explains the process will be the same as the one used to recover alumina and rare earths from its clay deposits in Quebec. Instead of inputting red clay, it will use red mud and apply acid, which is expected to reduce the red mud into harmless ingredients, including alumina.

“Incredibly enough, in the red mud there is a high quantity of alumina that is left by the Bayer process — not a very efficient process.”

Recent tests have shown that Orbite’s process could isolate the key components found in red mud and remediate them as high-value commercial products such as magnesium oxide, iron, titanium and aluminum, while reducing the quantity of red mud by 90%.

Boudreault adds that the tentative agreement, announced on June 27, could pave the way for Nalco to become a licensee of its patented technology, as well as participate as a partner in its Gaspé-based project.

In March, the company inked a memorandum of understanding with Russia’s Rusal, which it hopes will lead to a joint-venture agreement.