The Rare Earth Situation: Why Are They Important?
PART 2
Less than a decade ago, the United States was the world’s major producer of rare earth materials from Molycorp, Inc.’s Mountain Pass, California mine and refinery. But price pressures from sources in China, coupled with environmental compliance issues, caused Molycorp to cease operations in 2002.
Control of rare earth resources and the manufacture of goods containing rare earth materials are key parts of China’s industrialization strategy and emergence as a world power. China recently announced intentions to restrict export of certain rare earth materials by about 11% starting in 2011, citing the need to address environmental issues associated with mining, but also reserving supplies for China’s internal development needs. China also is increasing efforts to stop “rogue” mining efforts in outlying areas of China that provide up to 25 percent of Japan’s supply of rare earth materials through black market trade.
As a consequence, much of the industrialized world, and especially Japan, is scrambling to secure access to alternative rare earth sources. Large reserves of rare earth materials are known to exist in the United States, Australia, Canada, and South Africa, and stiff competition is emerging as countries, including China, are seeking to control access. Unfortunately, development of these resources is very costly and time-consuming. Developing new mines will take at least 7 to 10 years to secure permits, develop the infrastructure required for mining, and to establish the complex chemical processing facilities to separate and purify rare earth metals and oxides.
In the United States, Molycorp Minerals, LLC is moving aggressively to re-establish its rare earth mining and refining activities. Molycorp plans to increase production of rare earth materials up to 40,000 metric tons by the end of 2013. Although this is an important contribution, it is insufficient to meet the world’s rapidly growing demand for rare earth materials. Molycorp’s primary ore body contains important “light” rare earth elements such as neodymium, which is in high demand for magnets and lasers, but is relatively poor in its content of “heavy” rare earths compared to China’s ore. Other sources will need to be developed to supply dysprosium and terbium, which the US Department of Energy has identified as two of the most critical materials limiting the growth of clean energy over the next 5 to 15 years. Dysprosium and terbium are lesser known rare earth elements, which are added in minor but important amounts, to improve the performance of magnets and actuators.
For the near-to-mid term, China will continue to have monopoly control of rare earth materials. A potential exists that China will restrict exports to force manufacturers in industrialized nations to move their operations to China in exchange for access to raw materials. A potential also exists that China may manipulate the price of rare earths to delay or prevent the economic development of rare earth reserves elsewhere, preserving their control much longer.
Posted by Rich Tenaglia
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