Everbright Securities: The potential for magnesium oxide in future rare earth smelting applications is worth looking forward to. It is recommended to pay attention to PRCO

According to the Zhitong Finance APP, Everbright Securities has released a research report stating that magnesium oxide has broad application scenarios in the field of hydrometallurgy, and in the future, it will not only be limited to nickel-cobalt scenarios but also has significant application potential in the rare earth sector. Different grades of magnesium oxide will affect indicators such as single consumption, precious metal recovery rate, production efficiency, and impurity content in hydrometallurgy, thereby leading to cost differences. The market potential of active magnesium oxide is promising, and diversified application scenarios may bring price elasticity to the products. PRCO's magnesium oxide products have been used in the hydrometallurgy field and may be applicable in the rare earth sector in the future. It is recommended to pay attention to: PRCO (002225.SZ).

The main points of Everbright Securities are as follows:

Using ammonium salt processes for in-situ leaching of rare earths can lead to environmental shutdown issues, while the newly developed magnesium salt process has the potential for green mining.

In the traditional ammonium salt system (ammonium sulfate) in-situ leaching process, producing 1 ton of rare earths (measured in REO) requires consuming 7-12 tons of ammonium sulfate, and the residual ammonium salts in the mine cause long-term exceedance of ammonia nitrogen in the mining area and surrounding water systems by dozens of times. Some mining companies have been forced to suspend production, leading to a severe shortage of heavy rare earth supply. Researchers from China Southern Rare Earth Group and Ganzhou Rare Earth Mining Technology Service Company conducted pilot tests in 2020 using a magnesium salt system in the Dingnanling North mining area (ion-type rare earth mine). During this process, magnesium oxide slurry was added to the enrichment pool when the mother liquor was concentrated, controlling the pH of the mother liquor to be neutral; after sedimentation, the precipitate was a hydrogen oxide rare earth concentrate.

The magnesium salt process is more economical: Compared to the ammonium salt process, cost analysis from mining trials shows that the comprehensive cost of the magnesium salt process is reduced by 8.0% compared to the ammonium salt process, and it is environmentally friendly.

More environmentally friendly. Ammonia nitrogen poses a threat to the ecological safety of water bodies, and a series of environmental issues such as water treatment directly affect mining production. The magnesium salt system does not introduce ammonia nitrogen throughout the process, and pilot results indicate that this system does not cause problems such as water hardening or salinization.

Higher comprehensive resource utilization. Significantly reduces the rare earth loss rate. The rare earth content in the supernatant after sedimentation in the magnesium salt system is generally 0.003g/l, while the content in the ammonium salt system is 0.03g/l, differing by an order of magnitude. Comprehensive recovery of aluminum. In the ammonium salt system, aluminum, as an impurity, is precipitated and landfilled; in the magnesium salt system, aluminum hydroxide products can be obtained separately during post-treatment. This pilot test showed that the yield of aluminum hydroxide is about 0.15-0.20t/tREO.

Significant improvement in product quality. Under the magnesium salt system, aluminum and rare earths can be fully separated, with the aluminum oxide content in the hydroxide rare earth being less than 0.3% (the ammonium salt system is usually above 1.5%); the content of heavy rare earths is increased (elements such as gadolinium, terbium, dysprosium, holmium, erbium, and lutetium are generally higher by 15%-25%).

Significant improvement in production efficiency. The magnesium salt process uses magnesium oxide solution to enrich the mother liquor, with sedimentation for hydroxide rare earths typically taking 1-2 hours; the ammonium salt system uses ammonium bicarbonate for impurity removal, with clarification time generally taking 8-10 hours. The magnesium salt process can greatly improve work efficiency, and with the same capacity of treatment pools, it can significantly increase the processing capacity of the mother liquor, enhancing mining capacity Everbright Securities believes that there are high requirements for magnesium oxide in rare earth scenarios, mainly due to its reaction mechanism being similar to that of hydrometallurgical nickel-cobalt, thus there are certain requirements for activity, purity, impurity distribution, and crystal particle size. According to the patent "A Method for Ammonium-Free Enrichment of Rare Earth Mother Liquor," there are significant differences in the single consumption and precipitation effects of magnesium oxide of different grades corresponding to rare earth enrichment.

Risk Warning

The progress of the magnesium salt process route is not as expected, there is a risk of new technology paths replacing existing ones, and market competition is intensifying