Economic evaluation as a critical part of the mine development process: The case of rare earths

Mine development cannot progress without observing positive results of economic evaluation, which is the potential profitability of a future mine. According to the discounted cash flow (DCF) method, i.e., the most widely used method in mining, net present value is generally calculated as an indicator of project profitability. However, in the case of critical metals, e.g., rare earth elements (REE), the required for the economic calculations data is problematic to be generated. This is due to the specific features of these metals which also complicate economic evaluation of corresponding projects. Using the recent example of REE the paper explains how exactly their specific features complicate economic evaluation. We suggest possible solutions which include the extension of the DCF method, e.g., by the additional application of game theory, as well as the use of alternative methods, e.g., real options. Finally, we discuss the need for an integrated approach to economic evaluation of REE projects.