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The Truth About Rare Earths, Part 1

Rare Earth Elements (REEs) and their availability have been much in the news recently. There seems to be a lot of confusion and misunderstanding about what these are, where they are used, and what the supply issues are. I will try to clarify some of these issues.

First, here are a few basic facts about rare earth metals:

  1. Rare earth elements are not “rare” and they are not “earths.” They are, in fact, a series of non-ferrous metals that are widely distributed in the environment. Most of them are as common as copper, and even the rarest is more common than gold. There is no shortage of these elements in the Earth’s crust. What is rare is commercially viable concentration of ores. Fortunately for the United States, most of the commercially viable deposits reside in North America and China.
  2. Today, China is the primary source of REEs. Although the United States was self sufficient through the 1980s, the last US refinery closed in the mid 1990s and the last mine closed in 2002. Today, the US produces no rare earths, although it continues to ship ore to Japan from its above-ground reserves.
  3. REEs are widely used in emerging “green” technologies. Each hybrid Prius from Toyota is reported to contain 66 pounds of REEs. REEs are widely used in wind turbines, compact fluorescent lamps, flat panel displays, catalytic converters, motors, and magnets. Military uses include radar and guidance systems
  4. Supplies are tight. Significant shortages are looming.
  5. There are no substitutes.

China currently supplies more than 90 percent of all REEs. Total world demand in 2010 is estimated at 130,000 tons, while total production will be about 120,000 tons. The shortfall is being met with recycling and depletion of stockpiles. Demand is expected to rise to 180,000 tons by 2012 and more than 200,000 tons by 2014, while Chinese production is expected to top out at 160,000 tons.

By 2012 or earlier China’s internal demand will exceed its production. In July 2010, China announced it will reduce exports by 72 percent. There are today no other sources for these REEs. Headlines were made recently when China allegedly halted shipments of REEs to Japan to protest a fishing dispute. Japan reportedly quickly capitulated and released the fishing crew, in order to resume shipments. This may be a preview of the next few years as China reserves its supplies for internal production and the rest of the world scrambles to develop new sources.

The US was not only self sufficient through most of the last century, it actually supplied the majority of the world’s needs for these REEs. Increasing environmental costs and low-priced competition from China conspired to shut down the industry in North America. There was little notice taken at the time as usage of these REEs was low and supplies seemed assured from an undeveloped China that was content to export raw materials.

The emergence of China as an industrial nation and the development of an internal environmental design and manufacturing capability should have sounded an alarm bell — and might have — had the economic slowdown not masked the growing disconnect between exploding usage and source insufficiency. Now the world is awakening to a “green revolution” where demand for REEs is skyrocketing and supplies are stagnating. Clearly, new sources for these essential REEs need to be developed.

In Part 2 of this column I will discuss options for mining rare earth elements and suggest what corporations can do to guarantee supplies.

6 comments on “The Truth About Rare Earths, Part 1

  1. DataCrunch
    October 25, 2010

    Tom, I recently read a report, in which Pentagon officials revealed that a massive lithium mineral deposit has been discovered in Afghanistan and could be worth an approximately $1 trillion .  This would basically put Afghanistan on the map as the “Saudi Arabia of lithium”.  Lithium as we all know is in high demand for its use in batteries from everything from smart phones to laptops and could alter the economy of Afghanistan dramatically.  Something to keep our eye on and with more discoveries like these, I am sure the region will become more volatile than it is.

  2. Ariella
    October 25, 2010

    Very interesting, Tom.  Will you also bring up environmental and safety concerns for mining?  In light of recent events in Chile, I'd imagine mine safety would be on a number of people's minds.

  3. Barbara Jorgensen
    October 25, 2010

    This was a fascinating part of DCA's Webinar and complete news to me. Mining gets a bad rap, but if the U.S. and other regions that compete with China have hobbled ourselves by shutting down mining, shame on us. I will be curious to hear if there are mining practices that may be safe or more environmentally friendly than coal and gold (as was the case in Chile.)

  4. DataCrunch
    October 25, 2010

    Hi Ariella, I suspect it may take a while for mining safety measures to reach China, as last year there were over 2,600 mining accident related deaths.  Fatal mining accidents continue to plague China today.  The International Federation of Mine Workers’ Unions estimates that each year, over 12,000 workers worldwide die in accidents.  Mining is a risky line of work, but let’s hope the Chilean event brings the issue to light and helps make mining a safer industry.

  5. Anna Young
    October 26, 2010

    Do you really believe anyone is thinking about mining safety while rare earths supply is threatened? It didn't even rate a mention in Tom Valliere's column. Mining for profit is what is at stake here and companies will do whatever they must to ensure they cut a slice for themselves. So, for now, let's get back to how a single country cornered the market for rare earths and plunged the rest of the world into a crisis. Once that problem is resolved–please forgive my sounding so cold–we can then go back to saving the world and our miners. Or, we can try to do the two simultaneously–a better option since they are not mutually exclusive goals.

  6. Ariella
    October 26, 2010

    Anna, mining is always done for profit. On a tour at the SterlingHillMiningMuseum.  I learned about the mining industry in general, and the New Jersey zinc mine in particular.  The reason the mine ceased to function in the mid-1980's is that it was no longer profitable to mine zinc, despite the abundance of its presence.  Ore, by definition, the guide informed us is something that yields profit.  If the cost of extracting the metal or mineral exceeds the price it can sell for, it is no longer classified as ore.  Mining accidents are not terribly rare (the guide referred to a methane explosion in a US coal mine that killed hundreds just a few months ago), but even in the 19th century there were some basic safety precautions in place to prevent miners from remaining trapped or running out of oxygen.  It is not very profitable to lose time and manpower in having to rescue miners, so preventative measures are worth the investment.  

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