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Rare earth elements (REEs) are a group of 17 chemical elements,
all metals, that tend to be found together in geologic deposits.
Rare earth metals and the alloys that contain them are used in a
variety of high-tech applications, such as wind turbines, electric
vehicles, rechargeable batteries, radar systems, and laser
crystals. For this reason, they are called "vitamins of modern
industry."
The importance of these elements for key industries and the
dominance of China in their global supply puts REEs at the center
of power struggles. In 2010, China blocked exports of rare earths
to Japan during a dispute on East China Sea islands. In early 2018,
the US introduced import taxes on REEs and rare earth products from
China. Tariffs were lifted shortly after, when the US realized that
products could not be readily sourced domestically or from other
non-Chinese sources. In mid-2019, China issued trade tariffs on
REEs and Chinese government representatives made comments that
could be interpreted as threats to cut REE supplies to US military
buyers. In response, the US government indicated a desire to become
independent of Chinese REE supplies. The surprising offer from the
US government to buy Greenland also seems to be motivated at least
in part by a potential rare earth mineral project.
Rare earth supply
The group of REEs includes the lanthanides, from lanthanum to
lutetium, plus yttrium and scandium. The major minerals containing
REEs are bastnaesite, monazite, and xenotime, which contain 60% to
75% rare earth oxide (REO) equivalent by weight. The REEs are
relatively abundant in the earth's crust. For example, cerium, one
of the light rare earth elements, is more abundant than copper.
REEs occur as a series of elements within the minerals, making
separation difficult and costly. Generally, the REO is isolated in
the separation process. The REO can be used directly or further
processed into other rare element earth chemicals and products.
In 2018, 88% of the world's REEs were processed and separated in
China. The only other major operational separation plant is in
Malaysia, where Lynas Corporation processes ore mined at the Mount
Weld deposit in Western Australia. About 62% of the rare earth
mineral concentrates were sourced in China in 2018, down from 79%
in 2015. This drop in China's REE concentrate production was caused
by the ramping up of production at the Mount Weld mine and at the
Mountain Pass, California mine, as well as imports of ore from
Myanmar. Imports of REE concentrates are therefore becoming
increasingly important for Chinese processing companies.
Permanent magnets are the largest and fastest-growing
sector
Neodymium iron boron (NdFeB) magnets account for about 90% of
the permanent magnets produced in 2018, with samarium cobalt (SmCo)
making up the remainder. In 2018, 34% of the total rare earth
demand was for permanent magnets. By 2023, this total is forecast
to increase to a 38% market share, a 4.9% average annual growth
rate.
An estimated 90% of the total permanent magnet materials were
produced in China in 2018. The largest use for permanent magnets is
in synchronous motors, which are found in wind turbines as well as
electric and hybrid vehicles. Other PM uses include magnetic
storage. Aside from magnets, REEs are used in polishing powders for
tablet and mobile phone screens, refinery and emissions catalysts,
and rechargeable nickel metal hydride batteries (See Figure 1).
Permanent magnets are also widely used for defense applications.
Recently, the Pentagon called for increased US domestic production
of NdFeB and SmCo magnets, due to sourcing concerns.
Situation in the United
States
The US consumed 13,000 tons of REOs in 2018, which is only 8% of
total world demand. China is not only the world's largest producer,
but also the world's largest consumer, with 68% of the total.
The United States has estimated reserves of around 1.4 million
metric tons. Production began in 1952 at the Mountain Pass,
California mine, one of the major world reserves of rare earth. In
2013, Molycorp produced over 5,000 metric tons of REO at Mountain
Pass. The mine was idled in October 2015 and shortly after Molycorp
filed for bankruptcy. The continued downtrend in price for REOs was
blamed for the company's financial failure. In June 2017, the
Mountain Pass mine was sold for $20.5 million to MP Mine Operations
LLC, a US-based consortium with Leshan Shenghe Rare Earth Co of
China holding a non-voting minority interest. In 2018, Mountain
Pass produced an estimated 12,300 metric tons of REO in the form of
a rare earth fluoride concentrate - which was exported to China.
There are two other advanced projects in the US. The Bear Lodge
Wyoming project from Rare Element Resources promises a 9,000 metric
ton REO plant but is awaiting further investment. The other notable
project is the Ucore Rare Metals project at Bokan Mountain in
Alaska - a 2,500 metric ton-per-year REO separation plant that
should begin production by 2023.
Eight companies in the US are currently able to manufacture
intermediate rare earth products either from minerals or from
primary products such as rare earth chlorides or oxides. In 2018,
production of 74% of these intermediate products and other
downstream rare earth products relied on imports from China.
Price dynamics
Over the last 15 years, the production of rare earth minerals
and refined products has largely moved to China. This trend has
created fears of a fundamental supply problem in the industry.
After an all-time high for REO prices in mid-2011, prices and
demand slumped in 2012. The price spike in 2011 was caused by
supply insecurity. The price was driven up by REE consumers
stockpiling material as the Chinese authorities placed export
tariffs and quotas on REEs. In 2014 and 2015, demand started to
pick up slightly, but prices continued to decline for all REOs into
the middle of 2017. Prices for some rare earths including
neodymium, praseodymium, and yttrium increased through the end of
2018 (See Figure 2).
What are the long-term supply considerations for the
US?
The main US government concern is the supply of REEs for defense
purposes, which is less than5% of the annual US REE consumption.
Finding an alternative source for rare earth products will take
time and be costly for the US. China produces low-cost,
good-quality REE products, although there are concerns for the
environmental damage caused by the industry. When the US removed
rare earth materials from the final tariff list in September 2018,
it was a clear sign that the US accepts its dependency on Chinese
imports. As we have seen in the past, threats to supply tend to be
short-lived, and they haven't been a suitable foundation for
creating an economically viable domestic rare earth mining and
production industry.
Posted 25 October 2019 by Adam Gao, Ph.D., Director, Inorganic Chemicals, Minerals, Mining Chemicals and
Samantha Wietlisbach, Chemical - Inorganic Chemicals and Industrial Minerals and
