China vows not to use rare earths as leverage
China has slashed export quotas and reduced shipments to Japan, igniting international concern that it could use rare earth exports as an economic or political lever. Prices have spiked and mining firms are rushing to develop sources of the minerals outside China.
The U.S. and European Union this week said they were pressing for solutions to fears that China was choking supply of the substances used in lasers, computers and superconductors, among other applications, and the issue is expected to figure at next month's G-20 summit.
Chinese Ministry of Industry and Information Technology spokesman Zhu Hongren said Beijing sought international cooperation.
"China will not use rare earths as an instrument for bargaining," he told a news conference on Thursday. "Instead, we hope to cooperate with other countries in the use of rare earths on the basis of win-win outcomes and jointly protecting this unrenewable resource."
The ministry is one of several in China that oversee rare earths.
Zhu was speaking on the same day a newspaper published by China's Ministry of Commerce urged China to resist pressure to allow foreign firms more access to its rare earths.
U.S. Secretary of State Hillary Clinton said she was unaware of China's vow not to use them as a bargaining chip, and, speaking in Hawaii, said she would welcome any clarification of China's stance on the minerals.
"I ... hope that it means trade and commerce around these important materials will continue unabated and without any interference," Clinton told a news conference with Japan's foreign minister.
"At the same time, because of the importance of these rare earth minerals, I think both the minister and I are aware that our countries and others will have to look for additional sources of supply," she said.
One engineering firm, Japan's Nidec, has already said it will start making motors that do not use rare earths to lessen reliance on the minerals.
China supplies about 97 percent of the world's demand for rare earth metals, which possess magnetic, luminescent and other properties used in emerging clean energy technologies, computers and electronics.
Prices of some rare earths on world markets have increased tenfold this year, reversing a long-trend toward lower prices caused largely by greater Chinese production over the past two decades.
In response to higher prices and worries among major consumers such as Japanese hi-tech industries that they will be unable to rely on large scale deliveries from China, mining firms are scrambling to speed up mine development timetables.
Shares in potential producers of the minerals outside China, such as Molycorp and Lynas Corp have rocketed since July, when China said it was reducing exports by 72 percent in the second half of the year.
Australian firm Arafura Resources on Thursday raised A$90 million ($87.5 million) to develop a rare earths project, but some analysts have said the long-term investment case for the minerals may be weak, and the market has the makings of a bubble.
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Energy
Can the U.S. Rare-Earth Industry Rebound?
- Friday, October 29, 2010
- By Katherine Bourzac
The U.S. has plenty of the metals that are critical to many green-energy technologies, but engineering and R&D expertise have moved overseas.
Rare-earth elements were obscure until the past year, when China, their primary producer, tightened export quotas on the materials. Rare-earth elements are used in a multitude of technologies, including magnets for wind turbines, hybrid-car batteries, fluorescent lightbulbs, and hard drives.
China is not the only country with significant reserves of these valuable materials; in fact, the U.S. was their primary producer until the 1990s, when the Chinese began undercutting the Americans on cost. Now companies in the U.S. and Australia are ramping up production at two rich sites for rare earths, but the process will take years. Getting from rocks to the pure metals and alloys required for manufacturing requires several steps that U.S. companies no longer have the infrastructure or the intellectual property to perform.
Contrary to their name, rare-earth metals are abundant in the Earth's crust, and significant reserves are concentrated in the United States, Australia, Brazil, and other countries. According to the U.S. Geological Survey, there are 13 million tons of extractable rare earths in the United States, 5.4 million in Australia, and 19 million in Russia and neighboring countries. In 2009, China had 36 million.
In the 1970s and 1980s, the Mountain Pass mine in California produced over 70 percent of the world's supply. Yet in 2009, none were produced in the United States, and it will be difficult, costly, and time-consuming to ramp up again. "When you stop mining in this country, as investment goes down, expertise on cutting-edge technologies is exported as well," says Carol Raulston, spokeswoman for the National Mining Association. Rare-earth researcher Karl Geschneidner of the Ames National Laboratory in Iowa also sees a lack of what he calls "intellectual infrastructure" for rare-earth technology development in the United States.
The two mines that will be stepping up production soonest are Mountain Pass, being developed by Molycorp, and the Mount Weld mine, which is being developed by Lynas, outside Perth, Australia. Mountain Pass has the edge of already having been established. But the company cannot use the processes used in the mine's heyday: they're both economically and environmentally unsustainable.
Several factors make purification of rare earths complicated. First, the 17 elements all tend to occur together in the same mineral deposits, and because they have similar properties, it's difficult to separate them from one another. They also tend to occur in deposits with radioactive elements, particularly thorium and uranium. Those elements can become a threat if the "tailings," the slushy waste product of the first step in separating rare earths from the rocks they're found in, are not dealt with properly.
Mountain Pass went into decline in the 1990s when Chinese producers began to undercut the mine on price at the same time as it had safety issues with tailings. When the Mountain Pass mine was operating at full capacity, it produced 850 gallons of waste saltwater containing these radioactive elements every hour, every day of the year. The tailings were trucked to evaporation ponds. In 1998, Mountain Pass, which was then owned by a subsidiary of oil company Unocal, had a problem with tailing leaks; four years later, the company's permit for storing the tailings ran out and Unocal did not pursue its renewal.
Meanwhile, throughout the 1990s, Chinese mines exploited their foothold in the rare-earth market. The Chinese began unearthing the elements as a byproduct of an iron-ore mine called Bayan Obo in the northern part of the country; getting both products from the same site helped keep prices low initially. And the country invested in R&D around rare-earth element processing, eventually opening several smaller mines, and then encouraging manufacturers that use these metals to set up facilities in the country.
Meanwhile, worldwide demand for rare-earth elements has been growing. This year demand was 125,000 tons; by 2015, it is expected to grow to 225,000 tons, and Molycorp spokesman Jim Sims notes that this projection does not include the wind-turbine industry, which is expected to be a major market. State-of-the-art wind turbines like those that will be installed at the world's largest wind farm, an 845-megawatt facility in Oregon, use high-efficiency rare-earth magnets. They can be 10 times lighter and smaller than comparable magnets but equally strong. Each of these magnets requires a ton of rare earths, Sims says.
Molycorp renewed the Mountain Pass mining permit and began R&D of its own in 2004. This year, using rock that was mined before a previous permit expired and new separation technologies it has developed, the company will sell 3,000 tons of rare earths. By 2012, Molycorp expects to produce 20,000 tons a year, and under its current mining permits could double capacity to 40,000 tons. Sims also says the company will sell rare-earth products at half the cost of the Chinese in 2012. According to the company, these savings will be made possible by several changes, such as eliminating the production of waste saltwater. Molycorp will use a closed-loop system, converting the waste back into the acids and bases required for separation and eliminating the need to buy such chemicals. The company will also install a natural-gas power cogeneration facility onsite to cut energy costs.
But Ames Lab's Geschneidner notes that one major source of cost in the separation process can't be eliminated--the fact that it simply takes a long time. Milled rock is shaken again and again in a mixture of solvents to separate the elements by weight; depending on the ultimate purity that's required, this must be done 10,000 to 100,000 times. The result is then sold as a concentrate or treated to produce rare-earth metal oxides.
Even if Molycorp does succeed in reducing the costs of separation by half, the next step in production may cause a hiccup. Rare-earth oxides and concentrates do have a market, for example as catalysts for the petroleum industry, but they can't be made into magnets. To make magnets, rare-earth oxides must first be converted into pure metals, a process that produces caustic byproducts, and is done solely in China today. Sims says that Molycorp is investigating pathways that are environmentally friendly and aren't covered under intellectual property owned by foreign companies. These metals must next be made into alloys suitable for the magnets, another capability that's concentrated overseas, mostly in Japan and Germany.
The company's goal is to control every step along the supply chain, through production of alloys and eventually the magnets, too. Here, too, the U.S. lacks infrastructure and intellectual property, so Molycorp hopes to license or buy patents on making alloys, and will make magnets through a joint venture with another company.
By going public in July, Molycorp raised $379 million of the $511 million the company believes is required to put in place its projects by 2012. A bill pending in the House and the Senate would offer loan guarantees for Molycorp and other investors in rare-earth mines. And the company has applied for loan guarantees through the U.S. Department of Energy, which will give a final decision next summer.
China is not the only country with significant reserves of these valuable materials; in fact, the U.S. was their primary producer until the 1990s, when the Chinese began undercutting the Americans on cost. Now companies in the U.S. and Australia are ramping up production at two rich sites for rare earths, but the process will take years. Getting from rocks to the pure metals and alloys required for manufacturing requires several steps that U.S. companies no longer have the infrastructure or the intellectual property to perform.
Contrary to their name, rare-earth metals are abundant in the Earth's crust, and significant reserves are concentrated in the United States, Australia, Brazil, and other countries. According to the U.S. Geological Survey, there are 13 million tons of extractable rare earths in the United States, 5.4 million in Australia, and 19 million in Russia and neighboring countries. In 2009, China had 36 million.
In the 1970s and 1980s, the Mountain Pass mine in California produced over 70 percent of the world's supply. Yet in 2009, none were produced in the United States, and it will be difficult, costly, and time-consuming to ramp up again. "When you stop mining in this country, as investment goes down, expertise on cutting-edge technologies is exported as well," says Carol Raulston, spokeswoman for the National Mining Association. Rare-earth researcher Karl Geschneidner of the Ames National Laboratory in Iowa also sees a lack of what he calls "intellectual infrastructure" for rare-earth technology development in the United States.
Several factors make purification of rare earths complicated. First, the 17 elements all tend to occur together in the same mineral deposits, and because they have similar properties, it's difficult to separate them from one another. They also tend to occur in deposits with radioactive elements, particularly thorium and uranium. Those elements can become a threat if the "tailings," the slushy waste product of the first step in separating rare earths from the rocks they're found in, are not dealt with properly.
Mountain Pass went into decline in the 1990s when Chinese producers began to undercut the mine on price at the same time as it had safety issues with tailings. When the Mountain Pass mine was operating at full capacity, it produced 850 gallons of waste saltwater containing these radioactive elements every hour, every day of the year. The tailings were trucked to evaporation ponds. In 1998, Mountain Pass, which was then owned by a subsidiary of oil company Unocal, had a problem with tailing leaks; four years later, the company's permit for storing the tailings ran out and Unocal did not pursue its renewal.
Meanwhile, throughout the 1990s, Chinese mines exploited their foothold in the rare-earth market. The Chinese began unearthing the elements as a byproduct of an iron-ore mine called Bayan Obo in the northern part of the country; getting both products from the same site helped keep prices low initially. And the country invested in R&D around rare-earth element processing, eventually opening several smaller mines, and then encouraging manufacturers that use these metals to set up facilities in the country.
Meanwhile, worldwide demand for rare-earth elements has been growing. This year demand was 125,000 tons; by 2015, it is expected to grow to 225,000 tons, and Molycorp spokesman Jim Sims notes that this projection does not include the wind-turbine industry, which is expected to be a major market. State-of-the-art wind turbines like those that will be installed at the world's largest wind farm, an 845-megawatt facility in Oregon, use high-efficiency rare-earth magnets. They can be 10 times lighter and smaller than comparable magnets but equally strong. Each of these magnets requires a ton of rare earths, Sims says.
Molycorp renewed the Mountain Pass mining permit and began R&D of its own in 2004. This year, using rock that was mined before a previous permit expired and new separation technologies it has developed, the company will sell 3,000 tons of rare earths. By 2012, Molycorp expects to produce 20,000 tons a year, and under its current mining permits could double capacity to 40,000 tons. Sims also says the company will sell rare-earth products at half the cost of the Chinese in 2012. According to the company, these savings will be made possible by several changes, such as eliminating the production of waste saltwater. Molycorp will use a closed-loop system, converting the waste back into the acids and bases required for separation and eliminating the need to buy such chemicals. The company will also install a natural-gas power cogeneration facility onsite to cut energy costs.
But Ames Lab's Geschneidner notes that one major source of cost in the separation process can't be eliminated--the fact that it simply takes a long time. Milled rock is shaken again and again in a mixture of solvents to separate the elements by weight; depending on the ultimate purity that's required, this must be done 10,000 to 100,000 times. The result is then sold as a concentrate or treated to produce rare-earth metal oxides.
Even if Molycorp does succeed in reducing the costs of separation by half, the next step in production may cause a hiccup. Rare-earth oxides and concentrates do have a market, for example as catalysts for the petroleum industry, but they can't be made into magnets. To make magnets, rare-earth oxides must first be converted into pure metals, a process that produces caustic byproducts, and is done solely in China today. Sims says that Molycorp is investigating pathways that are environmentally friendly and aren't covered under intellectual property owned by foreign companies. These metals must next be made into alloys suitable for the magnets, another capability that's concentrated overseas, mostly in Japan and Germany.
The company's goal is to control every step along the supply chain, through production of alloys and eventually the magnets, too. Here, too, the U.S. lacks infrastructure and intellectual property, so Molycorp hopes to license or buy patents on making alloys, and will make magnets through a joint venture with another company.
By going public in July, Molycorp raised $379 million of the $511 million the company believes is required to put in place its projects by 2012. A bill pending in the House and the Senate would offer loan guarantees for Molycorp and other investors in rare-earth mines. And the company has applied for loan guarantees through the U.S. Department of Energy, which will give a final decision next summer.
