From what I am reading in the media, the Chinese are going through the back door to acquire the rare earth minerals at Nechalacho, (pronounced: Netcha-latcho), which is 100 kilometers southeast of Yellowknife.
In other words, the Chinese are buying the minerals next door to Dettah and dead centre in the territory of the Yellowknives Dene First Nation, and which is part of Akaitcho Territory Government’s land claim negotiations.
And this is being done without consulting or meeting with the Yellowknives Dene or other Indigenous stakeholders.
When I was on the Yellowknives Dene Band Council, the developing mine was owned by Avalon Rare Metals. Its president/CEO and shareholder was Don Bubar, who brought us to Nechalacho and proudly showed us the environmentally-friendly tactics they were using in their exploration.
Bubar told us how rare earths are an essential component for electric vehicles, wind turbines, phones, LEDs and electronics. That means rare earths are needed to help reduce carbon emissions while moving to a greener economy.
Bubar told us that China controls over 85 per cent of the world’s rare earth processing, much like De Beers once did with diamonds. He said this project would supply rare earths to Canada and its allies, decreasing reliance on China.
Nechalacho would provide jobs and contracts to Yellowknives Dene and other Akaitcho members, help drive Indigenous economic reconciliation, and assist with much needed Northern infrastructure development.
Their vision included starting small, growing with time, and having meaningful Indigenous project ownership and Indigenous representation on the board.
What the heck is happening?
China is starting to buy up this project, through a company called Shenghe Resources that the Chinese government partially owns.
Apparently, Avalon had to raise money for a lithium property in Ontario, which is easier to develop than Nechalacho. So, it sold the top 500 feet of the Nechalacho property to an Australian company named Vital Metals Ltd. — that is, it sold the part that is richest in rare earths and easiest to mine.
This deal was made with Geoff Atkins, Vital Metals CEO and managing director, someone who thought the same way as Don Bubar.
Last year, new funders invested in Vital and suddenly most of the management and board who were committed to Bubar’s vision were gone, including Geoff Atkins and the chair.
Last month, Vital Metals put out a press release saying that Shenghe Resources had become “a cornerstone investor with a 9.9 per cent strategic position in the company.” Shenghe is a Chinese company that’s at least partially owned by the Government of China.
To boot, the deal provided Shenghe with the option to buy another 8.2 per cent of Vital Metals. This would bring China’s ownership of Vital up to a little over 18 per cent; this means China would own over 18 per cent of Nechalacho, which is on the doorstep of Dettah.
To add insult to injury, the Chinese were also guaranteed a seat on Vital Metals’ board of directors, something it has not done for Indigenous stakeholders. And Vital Metals is also selling to China all of Nechalacho’s already mined and stockpiled ore.
What are the implications?
Vital Metals stopped engaging and communicating with the Yellowknives Dene and other Indigenous communities, leaving them and their members completely in the dark.
Nechalacho’s ore will no longer be processed at Vital Metal’s Saskatchewan processing plant as that plant has been mothballed. Shortly before his passing, Chief Eddie Sangris attended a ceremony there with other Canadian, US, and European leaders. They all spoke glowingly about how it would help provide rare earth metals to the Western world.
China maintains control over minerals critical to Canada’s digital and green economies and national security. Once China gets into a rare earth company, they usually ship all or most of the ore they control back home.
It appears Indigenous governments won’t see their 25 per cent share of the royalties from the ore now being sold from Yellowknives Dene territory. When asked about royalties on the ore that China is acquiring, the GNWT said, “Despite the Shenghe ore sale, royalties are a question for a later date.”
I’m wondering if the GNWT consulted with Indigenous governments before issuing this statement.
Akaitcho Territory ore will be cheaply processed in China, which has poor environmental, safety and human rights practices. These are issues the Dene have fought long and hard against.
Feeding the Chinese supply chain is also completely opposite to Don Bubar and Geoff Atkin’s vision and how the project was presented during the regulatory process and to the communities.
When Avalon and Vital Metals were led by Bubar and Atkins respectively, they won awards for engagement, leading-edge environmental practices and a commitment to a Canadian rare earths supply for Canada, its friends and allies. They also had high levels of Indigenous staff and even hired Det’on Cho to do the mining.
Could the project shut down?
If the Chinese continue getting more control of Vital Metals, they might simply cause the Nechalacho mine to shut down to keep the ore in the ground. MLA Richard Edjericon fears this and told Cabin Radio, “If you park it, that’s detrimental to business and job opportunities for our members in small communities who depend on industry for work.”
Edjericon added, “One of the reasons it was approved is it was going to increase jobs and business for the people of the North.”
Edjericon is the MLA for Tu Nedhé-Wiilideh, which includes the Nechalacho mine. He chaired the Mackenzie Valley Environmental Impact Review Board when the Nechalacho project was assessed.
It appears Vital and the Chinese are trying to pull a fast one to get around Indigenous landholders, the GNWT and the federal government. Do you think our Indigenous stakeholders and regulators would ever support what the project has become? Absolutely not!
We need our Indigenous leaders and the new Government of the NWT to call upon the federal government to put a stop to this nonsense. No way should the Chinese be allowed to purchase the Nechalacho rare earth project nor any ore from it.
2005: Avalon and CEO Don Bubar begin exploration
2010: YKDFN names the site Nechalacho during a naming ceremony
2011-19: Avalon defines a very large and attractive rare earth deposit at Nechalacho
2020: Vital Metals, led by managing director Geoff Atkins, purchases the upper portion of the Nechalacho Rare Earth Project
2021: Det’on Cho Development Corporation is contracted to begin mining at Nechalacho. Vital opens an office in Yellowknife.
2021: YKDFN cuts a ribbon, commissioning the low-impact ore sorter that does not use water or chemicals or produce tailings.
2022: Prime Minister Justin Trudeau and diplomats from over 30 countries visit Vital’s operations in Canada
2022: Chief Ed Sangris addresses international representatives at a ceremony celebrating a rare earth supply chain independent of China
2022: Lionhead Resources, a private equity firm, invests in Vital Metals, changing the development strategy. Geoff Atkins, the chair, and all the senior management depart Vital Metals. Most of the board changes.
2023: Vital Metals abandons its rare earth processing facility in Saskatoon
2023: In December, Vital Metals announces deals to sell 9.9 per cent of Vital Metals with options for another 8.2 per cent of Vital Metals to Shenghe Resources of China. Vital will also sell the rare earth ore mined to date at Nechalacho to China.