High demand, restricted supply have raised profile of rare earth elements

High demand, restricted supply have raised  profile of rare earth elements

With 95 percent of the market and new restrictions on the export of rare earth elements, China currently has a stranglehold on the global supply of these important materials.
   
“China was naturally blessed with 40 to 60 percent of the world’s rare earths.  The Middle East has oil, China has rare earths,” Matthew James, a spokesman for Lynas Corp. a mine operator out of Sydney, Australia said

The supply issues surrounding rare earth elements has sparked the United States and other countries to take action and develop new mines and processing facilities.

The U.S. Department of Energy is set to release a strategic plan this fall addressing the role of rare earth elements in clean energy components.

“As a society, we have dealt with these types of issues before, mainly through smart policy and R&D investments that reinforced efficient market mechanisms.  We can and will do so again,” David Sandalow, an assistant secretary at the Department of Energy, recently told a U.S. Senate subcommittee.

Rare earth elements have properties that allow them to create light, powerful permanent magnets, which means mobile phones can get smaller and wind turbines can generate more energy per rotation. 

James said China became dominant in rare earth production because it was able to produce them at a low cost due to lax environmental standards. 

“The Chinese have paid a high environmental price for their dominance,” he said.  

James said the environmental concerns surrounding the mining and processing of rare earth elements relate to the levels of thorium and uranium, radioactive elements, that occur naturally in all rare earth ore. 

Lynas is bringing a rare earth mine in Mount Weld, Western Australia and a processing plant in Kuatan, Malaysia on line just as the supply of the elements has become an issue.

James said if money is spent on the right technologies, rare earth mining and processing can be done cleanly.
In an attempt to address the environmental issues caused by the mining and processing of rare earths, Lynas is building the largest waste-water cleaning plant in Malaysia and is purchasing expensive German-made gas cleaning systems for their operations, he said.

The Australian company is not alone in ramping up rare earth mining, Molycorp Minerals of Greenwood Village, Colo. is as well.

Jim Sims, a spokesman for Molycorp Minerals, said China’s increased domestic consumption of the elements in their wind turbine industry has been a factor behind their lowered exports. 

A single 2.5-megawatt wind turbine requires half a ton of rare earths, he said.

Sims said there was demand for 50,000 tons of rare earth elements outside of China this year, but China is only on track to export around 30,000 tons. This 20,000 ton deficit contributed to a 700 percent increase in the price of rare earth elements over just one year, he said. 

“There is pressure on companies and nations to build their own supply back-up,” Sims said.

Sims said Mountain Pass, Molycorp Minerals rare earth mine in Mountain Pass, Calif., has been operating since the 1950s and at one point supplied most of the world’s rare earth elements. 

While the Mountain Pass facility has been processing stockpiles of previously mined ore non-stop, the low cost of Chinese rare earths created a situation where it didn’t make economic sense for Molycorp Minerals to continue mining for new ore after its permit lapsed in 2002, he said.

Among all the uncertainty, there is some good news for the United States.

Molycorp is set to break ground in January on a new facility at the mine that will be completed in 2012 that has the potential to produce 20,000 tons of rare earth elements a year.

Sims said this means that within two years the United States will be virtually rare earth independent. 

The opening of the two mines does not mean the rare earth supply crunch will instantly be over.  Lynas' James said there will still be more demand than supply until at least 2015.