What You Should Know About Rare Earth Elements

The rare earth conversation often focuses on supply volume, but Ramón Barúa Costa emphasizes a critical distinction: Not all rare earths are created equal.

Costa, CEO of Aclara Resources, a Toronto-based rare earths developer, explains why it’s so important for North American companies to understand the unique scarcity and sourcing challenges of heavy rare earth elements like dysprosium and terbium, especially as demand surges in EVs, wind power and defense; how to create a stable supply of heavy rare earths; and why it’s critical to take an international approach.

What are some key things to consider about the rare earth elements discussion?

It’s a common mistake to speak broadly about rare earths without distinguishing between the individual elements. Each rare earth has different availability, applications and strategic importance—and lumping them together obscures critical nuances.

Today, demand is being driven primarily by rare earths used in permanent magnets, which are essential to the performance of electric vehicles. Without them, EV technology simply isn’t competitive. These magnets are also vital in wind turbines and defense systems, further amplifying their strategic value.

Of the 17 rare earth elements, only four are used in permanent magnets: two light rare earths—neodymium and praseodymium, and two heavy rare earths—dysprosium and terbium. The heavy rare earths are especially scarce. In nature, light rare earths outnumber heavy ones by a ratio of about 150 to one.

The U.S. Department of Energy has identified dysprosium as the single most critical of all rare earths, and for good reason. The best sources of heavy rare earths are ionic clays, where the neodymium/praseodymium to dysprosium/terbium ratio is closer to 10 to one—a far more balanced mix. These clays also have simple metallurgy, making extraction easier and more cost-effective.

So where’s the difficulty?

Ionic clays are rare, particularly outside of China and Southeast Asia. We estimate they account for less than 1 percent of known rare earth deposits outside of China. This is why China holds such a dominant position in the supply of heavy rare earths—they control most of the world’s ionic clay resources.

The world is not lacking in rare earth deposits, but many have complex metallurgy and low concentrations of the most in-demand elements. Most will never be viable producers.

For North America to secure a stable supply of heavy rare earths, the focus must shift to identifying and developing ionic clay deposits—the most promising and strategic source of these critical elements. Aclara is developing two of the only ionic clay deposits outside China, with a clean-tech, ESG-forward approach to extraction and plans for U.S.-based separation.

How does your model offer an alternative to China’s dominance in this space—and how does it help de-risk the supply chains of key North American industries?

Aclara stands out as one of the most promising alternatives to China’s dominance in heavy rare earth elements because of a unique combination of geology, technology, strategy and sustainability.

First, we’re developing two exceptional ionic clay deposits in Brazil and Chile — among the very few of their kind outside of China. These formations closely resemble the ionic clays that have made China the leader in heavy rare earth production, with high concentrations of critical elements like dysprosium and terbium.

Second, we’ve developed proprietary, clean extraction technology designed specifically for these clays. Our approach is environmentally, socially and financially sustainable—setting a new standard for rare earth development.

Third, we’re establishing rare earth separation capabilities in the U.S. This is a crucial piece of the puzzle. While the technology exists, there’s been no feedstock to support heavy rare earth processing facilities in the U.S. Aclara changes that by providing both the raw material and the know-how to finally make these facilities viable.

Fourth, our shareholder base gives us a solid foundation for long-term growth. Hochschild Mining, with deep expertise in sustainable mining, holds a 57 percent stake. CAP S.A., Chile’s leading iron ore producer, holds another 10 percent. These are experienced industrial operators committed to high standards of governance and long-term value creation—the ideal partners to build resilient and responsible critical minerals supply chains.

Finally, sustainability is at the core of everything we do. Our operations emphasize water recirculation, carbon footprint reduction and full reforestation. But sustainability also means social responsibility. We work hand-in-hand with local communities to foster shared development.

By integrating world-class resources, clean-tech extraction, U.S.-based processing and an ESG-first mindset, Aclara is well-positioned to help de-risk North America’s rare earth supply chain and support the transition to cleaner, smarter technologies.

As demand for electric vehicles, wind turbines and advanced defense technologies surges, how are you working to meet both the volume and ethical sourcing expectations of OEMs and policymakers in the West?

Meeting the sheer volume of rare earths required to support the global transition to electric vehicles, renewable energy and advanced defense technologies is going to be incredibly difficult. Demand is growing at such a rapid pace that new mines alone won’t be able to keep up. Soon, rare earths will be a constrained resource—and only those with forward-thinking, integrated strategies will secure reliable supply.

At Aclara, we believe credibility as a supplier comes from making the path to permanent magnets easier for OEMs and end users. That’s why vertical integration is at the heart of our strategy. It’s no longer enough to simply be a miner. Customers don’t want to piece together the supply chain themselves—they need a one-stop solution, from mine to magnet.

Our strategic partnership with Vacuumschmelze is key to this approach. We’re already developing alloy products to meet their specifications, ensuring alignment with the exact needs of downstream industries.

What are some other ways to make this kind of international approach healthy?

Geography also plays a critical role in de-risking supply chains. Our integrated model spans Chile, Brazil and the U.S.—three stable, aligned jurisdictions—working together to support a secure, transparent pipeline of critical materials.

On the ethical front, we firmly believe that how we extract these materials matters just as much as what we extract. Aclara’s extraction method is fundamentally different from traditional mining. We don’t use explosives, nor do we crush or mill—which are the two most carbon-intensive stages of conventional mining.

We fully recirculate water and use a common agricultural fertilizer as our main reagent, which is also recycled. We are committed to reforestation using native species and are deeply engaged with our local communities to ensure Aclara drives shared, sustainable development.

We aren’t just supplying critical materials—we’re building a new model for how the rare earth industry can operate: cleaner, fairer and fully aligned with the ethical and environmental expectations of the modern world.

Beyond extraction, refining and magnet manufacturing are emerging as critical supply chain choke points. How is Aclara positioning itself—and potentially its partners—to close this gap and help create a fully integrated, Western-aligned rare earth value chain?

One of the reasons refining and magnet manufacturing remain bottlenecks in the rare earth supply chain is the widespread perception that financial margins are too thin across the value chain. This belief has been largely shaped by Chinese pricing strategies, which don’t always reflect the true strategic value of rare earth materials.

We take a different view. The value of permanent magnets shouldn’t be assessed purely on cost—but on the transformative performance they enable in advanced technologies.

Take electric vehicles, for example: Each EV contains roughly $200 worth of permanent magnets, including about $15 worth of dysprosium. That relatively small investment drives a level of efficiency and performance that simply can’t be matched by alternative technologies.

Without permanent magnets, EVs are significantly less competitive. So, in the context of a $40,000 vehicle, that $200 component is not just worthwhile—it’s essential.

This illustrates a broader point: The rare earth industry, valued at around $5 billion, is foundational to global sectors worth trillions—including EVs, wind energy and defense. These numbers should prompt serious reflection and, more importantly, action.

To close the gaps in the Western-aligned rare earth value chain, collaboration is key. Governments, private companies and local communities must work together to de-bottleneck these critical segments. Aclara is committed to being part of that solution—not just through upstream extraction, but by building strategic partnerships and supporting regional refining and magnet manufacturing.

Our goal is to help create a fully integrated, resilient supply chain that aligns with Western values and meets the rapidly growing demand for high-performance, ethically sourced rare earth materials.