There is often confusing misinformation spread through the media about rare earth elements (REEs). With all the fuss over them, it is important that decision-makers have a basic understanding of the industry in order to promote good decision-making.
The following points were derived from interviews with four of the world's leading rare earth (RE) experts. Mr Dudley Kingsnorth, Executive Director of the RE consulting company Industrial Minerals Company of Australia (IMCOA); Mr Gareth Hatch, Co-founder of Technology Metals Research, LLC; Mr Mark Smith, Chief Executive Officer of Molycorp, which owns the Mountain Pass mine; And Professor Karl Gschneidner, distinguished professor in the Department of Materials Science and Engineering and senior metallurgist at the US Department of Energy's Ames Laboratory.
Misconception #1: If China cuts all exports of REEs, we will no longer be able to manufacture modern-day technology
Some reports assume that manufacturing of high-tech products could come to a halt if China cuts all exports of REEs. This is a fallacy. Since the 1990s, China has been enticing manufacturers to move their facilities to the Mainland by promising access to REEs. Mr Smith describes a three-tiered priority system within China's RE industry. First priority goes to Chinese consumers who get first dibs at REEs at lowest costs. Second priority, at higher cost, are international companies that move their facilities to China. The balance of the world's RE consumers fall under priority three. Obviously, the real danger is for countries that are heavily dependent on China for their RE elements if demand at the top two-tiered priority levels is high, which may crimp supply for the remaining consumers.
Therefore, foreign companies have been progressively moving their manufacturing to China. Clearly, manufacturing will not grind to a halt if China cuts off its exports.
Misconception #2: An RE is an RE
There is a tendency to talk uniformly about REEs. This is misleading because there are 17 different elements. There are heavy REs and light REs and each has its own unique properties and consumption levels.
Misconception #3: China possesses nearly all the world's REEs
According to the US Geological Survey, China possesses 48 percent of recoverable reserves. Some sources within China offer lower estimates. For example, according to the Secretary General of the Chinese Society of REs, China's reserves account for only 25 percent to 30 percent of the world's reserves. Presently, it is impossible to ensure complete accuracy in China's RE reserves. What is certain, though, is that China, with what reserves it does have, is responsible for 95 percent of the global production of REEs.
Misconception #4: REEs are rare
Belief that REEs are rare can be attributed to their name. The term, however, is a result of history. Kingsnorth explained that the name "rare earth" was generated about two centuries ago. At that time, if a mineral could not produce a metal, it was called an "earth". When the first REEs were discovered, people were unable to produce a metal from them. Additionally, the stone discovered was considered rare. Therefore, it was called "rare earth". It would take another 100 years from the time of initial discovery before the metals could be separated.
REEs are not rare at all. They are found in almost all massive rock formations. However, their concentrations range from 10 to a few hundred parts per million by weight. Therefore, finding them where they can be economically mined is rare.
Misconception #5: Recycling is a simple alternative
Every year, hundreds of millions of tonnes of "e-waste" end up being sold to Third World and developing countries such as Ghana, Malaysia, Vietnam, Pakistan, China and India, unsalvageable units are stripped of their copper, iron or even traces of gold. REEs, on the other hand, are not normally recycled because they are usually mixed with other materials, making it difficult to separate them out. According to Mr Kingsnorth, most applications use such small quantities of RE that it is unlikely to be economical to recycle.
Misconception #6: Every wind turbine has a neodymium-iron-boron magnet
Today, only 5 -10 percent of wind turbines use RE permanent magnet generators. Currently, there is a trend to develop larger wind turbines. According to experts, that amount will likely rise as more countries turn to wind power as alternative energy.
Misconception #7: Starting up RE mining and processing operations in the West will resolve the current RE crisis
The RE crisis is about more than a lack of diversified sources. According to Mr Hatch: "There is a missing piece--the ability to turn REs into metals and alloys." Mr Smith added: "We can mine all the REs that we want, but if we don't have a supply chain that connects us with the end use of those products, then what we are going to end up doing is sending the RE oxides someplace else, more likely China, to do the finishing work. Then they send it back. So what have we really accomplished"
Misconception #8: The RE dilemma can be beat with a bag of money
Restarting the supply chain will take time, money and expertise, the last of which is largely missing in the US.
Misconception #9: Determining a mine's mineralogy is a great indication of a mine's potential success
Determining mineralogy (which means identifying the mineral(s) containing the REs and ascertaining whether they can be readily separated) is indeed critical to the potential success of a RE mining venture. However, many people underestimate the complexity of mining and processing REEs. There is confusion between being able to do it technically and being able to do it economically. It may be technically possible to extract REEs from a known deposit, but too costly.
Misconception #10: Mountain Pass stopped producing REEs in 2002
Mountain Pass never stopped producing REEs in the facility's almost 58 years of operation. However, in 2002, mining came to a halt due to a lack of tailings basin capacity. After numerous upgrades and actions to resolve the issues, Molycorp is poised to restart mining of fresh ore as early as 2011 to ensure its mill can be fed by the middle of 2012.
Misconception #11: The REEs industry is a dirty one
Though REEs themselves are not toxic, press reports have honed in on the idea that the RE industry is unhealthy, unsafe, and environmentally damaging. This has been the case in China, especially in the south where illegal mining has been rampant. However, the Chinese government is acting to improve environmental conditions by consolidating or eliminating smaller companies and stamping out illegal mining.
Conclusions
In late 2010, China put a temporary halt on RE exports to heavily-dependent Japan amidst a territorial dispute. Despite Chinese insistence that it has no intention to use RE as a bargaining chip, tensions have still risen.
Exacerbating the situation are many misconceptions. Indeed, China does have a clear advantage. However, like other complex resource issues, REs must be understood in a nuanced way, with misconceptions cleared and a baseline understanding of where the global REs' industry is evolving.
For more detailed discussions, perspectives and additional misconceptions, please refer to the author's original article, first published in the IAGS Journal of Energy Security (March 2011 issue).
BY: Cindy Hurst