By Minener Staff | Published: May 2025
As the global demand for clean energy technologies soars, rare earth elements (REEs) have become critical resources in the race to decarbonize economies. While China continues to dominate global production—controlling around 70% of output and nearly all refining capacity—countries like Australia, the U.S., and Brazil are actively developing alternatives. Now, Chile is stepping forward as a promising but as yet untapped player in this strategic sector.
What Are Rare Earth Elements and Why Do They Matter?
REEs include 17 metals, notably neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb), all vital for high-efficiency permanent magnets used in wind turbines, electric vehicles, military applications, and electronics. Global EV sales jumped 570% from 2018 to 2023, reaching 13.8 million units—a boom that is fueling exponential growth in REE demand.
Chile’s Hidden Potential: From Zero Production to Strategic Stake
Chile currently produces no REEs. However, discoveries like the Penco Module, developed by Aclara Resources, have highlighted the potential of regolith-hosted deposits in central-southern Chile. These ionic clay-type deposits offer lower environmental impact and operational costs than hard-rock mining.
According to the study, the Penco deposit holds 27.5 million tons of ore with 2,292 ppm of REEs, equating to roughly 63,000 tons of REO. If approved, the project could produce 1,700 tons of REO annually and generate an after-tax NPV of $178 million USD.
Environmental Design and Circular Economy Measures
The Penco project emphasizes sustainability through the use of non-toxic ammonium sulfate leaching, 95% water recycling, and backfilling of shallow pits. Additionally, 160 hectares of eucalyptus and pine monoculture would be reforested with native species.
Broader Opportunities: Relics, Tailings, and Pegmatites
Beyond regolith-hosted REEs, Chile also holds promise in recovering REEs from copper mine tailings and iron oxide-copper-gold (IOCG) systems. Some tailings contain up to 4,300 ppm REE, offering a potential path for economic and environmental remediation through reprocessing.
Pegmatites and placer-type deposits in the Biobío region also show REE enrichment but remain largely unexplored economically.
Growth Scenarios: Chile’s Role in Global Supply
The study models three growth scenarios for Chile’s REE sector:
- Base Case: Only the Penco Module operates (~1,700 tons/year REO)
- Moderate Growth: Additional small deposits and 10 reprocessed tailings (~4,000 tons/year)
- High Growth: Three large and five small new deposits plus 15 tailings (~8,000 tons/year)
Under the high-growth scenario, Chile could capture 2% of global REO output by 2040, with even greater strategic importance in the high-value segment of heavy REEs (HREEs), where China has near-total control.
Challenges and Strategic Recommendations
While Chile’s geology and resource potential are promising, realizing this opportunity requires faster environmental permitting, clear national policy on critical minerals, and investment in sustainable extraction technologies.
If successfully developed, Chile could diversify its mining economy beyond copper and lithium, helping to secure global REE supply chains and contributing to the energy transition.
Sources:
2 thoughts on “Chile’s Rare Earth Mining Potential Emerges Amid Global Race for Critical Minerals”