Rare earth elements, the backbone of the green industry and the defense sector, are getting increased attention worldwide. In September 2010, the Japanese claimed that China was blocking exports of certain rare earth elements (REEs) to Japan in retaliation for a fishing incident. While China dismissed this claim as untrue, it did reduce worldwide exports of REEs by 40 percent in July 2010.1
Global demand for REEs is 134,000 tons per year, while global production is approximately 124,000 tons. Above-ground stocks and inventories are currently able to make up the difference between demand and production. By 2012 though, demand is expected to rise to 180,000 tons and, by 2014, demand is expected to be more than 200,000 tons. Current supplies will not be able to meet that demand.2 Compounding the situation, within the next five to ten years, China’s consumption of REEs may lead the country to stop exporting REEs altogether.
China mines 93 percent of the world’s REEs3 and 97 percent of the world’s rare earth oxides are produced by China.4 China, dominates all aspects of the rare earth supply chain from mining to production. Countries that do not have access to REEs may be severely limited in their ability to become energy independent, to create innovative technology products, and to defend themselves.
REE’s Global Supply Chain
There are 17 REEs. Light REEs include lanthanum, cerium, praseodymium, neodymium and heavy REEs include promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, yttrium and scandium. Light REEs are more plentiful and concentrated than heavy REEs. In general, REEs are actually more abundant than many other minerals, such as silver and copper, but are usually not concentrated in large amounts, thus making extraction very expensive.5
The supply chain for REEs consists of mining, separation, refining oxides into metals, fabricating alloys, and manufacturing (devices and component parts).
REEs are usually found in bastnaesite and monazite mineral deposits. There are bastnaesite deposits in the United States as well as in China; monazite deposits have been found in Australia, South Africa, China, Brazil, Malaysia, and India. Bastnaesite occurs as a primary mineral, while monazite is usually found as a byproduct of other minerals. About 90 percent of economically recoverable REEs are found in Bastnaesite.6
Despite the existence of deposits around the world, most active REE mines are found in China. REE mines in the U.S. were shut down in the 1980s because they could not compete against low-cost Chinese mines. In the next two to five years though, mines are expected to be up and running in the U.S., Australia, and Canada.7 Estimates for opening up a new mine and separation plant range from $500 million to $1 billion and can take a minimum of eight years.8
Because of the prohibitive start-up costs and time constraints, some countries, like Japan are using urban mining to find REEs. Urban mining consists of recycling stockpiles of used electronics, like cell phones and computers, and taking out valuable metals and minerals, such as REEs. The Japanese estimate that electronic stockpiles in Japan may hold an estimated 300,000 tons of rare earths.9
The mining of REEs has been also associated with a whole host of environmental problems. There are radio-active hazards associated with mining monazites, which is why they are not mined in the U.S.10 Sulfates, ammonia and other chemicals are used for extracting the REEs; run off from the mines has made local drinking water sources unfit. China claims that it is reducing exports of REEs to protect the environment. A claim many view as valid.11
Processing REEs (separation, refining, and alloying)
While mining of REEs is an important part of the REE supply chain, processing the REE ores into usable metals is very important as well. For example to make magnets, the ore has to be treated with acids and bases to make metal oxides. Then the oxides have to be separated to make pure metal, which has to be made into alloys, such as neodymium-iron-boron alloy that is used to make computer hard drives.12
While Japan and Germany have a few processing plants, China dominates this part of the supply chain as well. There are no REE separation plants outside of China that are capable of producing all the heavy rare earths as separated oxides.13 A US GAO report notes that
China produces 97% of the REE raw materials, about 97% of rare earth oxides, and is the only exporter of commercial quantities of rare earth metals… About 90% of the metal alloys are produced in China (small production in the United States) and China manufactures 75% of the neodymium magnets and 60% of the samarium magnets.14
In the U.S., Molycorp has a separation plant for light REEs, but it still needs to sends its REEs to China for final processing.15 There are no facilities in the U.S. for refining and alloying REEs.16
Many of the innovative products of the global economy from the iphone to wind turbines are dependent on REEs. REEs are used to help miniaturize products and strengthen magnets. Applications in the green energy field (energy efficient light bulbs, hybrid cars, wind farms, etc.) and in the military sector (fins in steer precision bombs, and fins and rudders of F-22 Raptors, etc.) make them increasingly important to innovation and R&D, as well as national defense.17
- Europium, which is currently only produced in China, is used to make the red color for television monitors and LED light bulbs. Europium deposits have been found in Alaska, but China is still the only country that can process it.
- Lanthanum is a main component of Toyota Prius’s battery and is a key substance in petroleum refining; the Prius also uses neodymium, praseodymium, dysprosium and terbium.
- Neodymium is used to make the permanent magnets in wind turbines. Since China is increasingly focused on green energy initiatives, it may not have enough neodymium to export in the coming years. Neodymium is also used in GE’s incandescent light bulbs. GE has invested in both Chinese and other sources of REEs.18
China wants companies to create joint ventures in China to manufacture products made from REEs. Some companies have not done so because of concerns over intellectual property protection.
Because of REEs crucial role in innovative projects and its current stand-off with the Chinese government over REE exports, Japan is starting to try to find ways to produce the high-tech products without using REEs. Japanese companies are experimenting with copper alloys and iron magnets to replace REEs in motors or hybrid vehicles and other products.19
Meanwhile, companies and governments are looking for alternatives, stockpiles and REE reserves are being created to help cushion countries in case of a disruption to the global supply chain and to protect themselves in case of national security threat.
1 Hsu, Jeremy. “U.S. Sitting on Mother Lode of Rare Tech-Crucial Minerals.” Tech News Daily. March 8, 2010.
2 Humphries, Marc. “Rare Earth Elements: The Global Supply Chain.” Library of Congress. July 18, 2010.
3 Mellman, Ira. “Lack of ‘Rare Earth’ Minerals Could Cause Major Problems.” Voice of America News. September 27, 2010.
4 Hodge, Nathan and James T. Areddy. “China Hold on Metals Worries Washington.” Wall Street Journal. September 23, 2010.
5 Humphries, Marc. “Rare Earth Elements: The Global Supply Chain.” Library of Congress. July 18, 2010.
8 Hsu, Jeremy. “U.S. Sitting on Mother Lode of Rare Tech-Crucial Minerals.” Tech News Daily. March 8, 2010.
9 Tabuchi, Hiroko. “Japan Recycles Minerals From Used Electronics.” New York Times. October 4, 2010.
10 Humphries, Marc. “Rare Earth Elements: The Global Supply Chain.” Library of Congress. July 18, 2010.
11 Yaguang, Wang and Shen Yang and Ren Huibin. “China’s rare earth campaign targets environmental protection.” Xinhau. September 16, 2010.
12 Emspak, Jesse. “Rare Earths Processing Could Get A Boost In The U.S.” International Business Times. September 27, 2010.
13 “Avalon Rare Metals Inc. (TSE:AVL) Engages SNC-Lavalin (TSE:SNC) to Complete Scoping Study for a Rare Earth Separation Plant in North America.” Avalon. Press Release. August 19, 2010.
14 Humphries, Marc. “Rare Earth Elements: The Global Supply Chain.” Library of Congress. July 18, 2010.
15 Hsu, Jeremy. “U.S. Sitting on Mother Lode of Rare Tech-Crucial Minerals.” Tech News Daily. March 8, 2010.
16 Humphries, Marc. “Rare Earth Elements: The Global Supply Chain.” Library of Congress. July 18, 2010.
17 Hodge, Nathan and James T. Areddy. “China Hold on Metals Worries Washington.” Wall Street Journal. September 23, 2010.
18 Hsu, Jeremy. “Shortage of Rare Earth Elements Could Thwart Innovation.” Tech News Daily. February 12, 2010.
19 Tabuchi, Hiroko. “Japan Recycles Minerals From Used Electronics.” New York Times. October 4, 2010.