By Richard Felton. The question: “How rare are rare earths?” has been asked many times over the past two years as the immense commercial and strategic importance of these elements has become recognised. The apparently rational answer, of course, is: ”Not really rare at all”. But that is to look at the topic through a cat’s eye. For although these elements are quite widely distributed, they are by no means easy to obtain in usable concentrations and quantities. Neither are they exchange-traded in the same way as precious and non-ferrous metals. The trade through private markets is secretive and the roller coaster prices are difficult to tie down. For example, in 2010 a kilogram of the oxide of dysprosium (hard to get in Greece) sold for about $230. By 2011 it had reached $1454, and by earlier this year had settled back to about $1000.
The 17 rare earth (RE) metals are all members of the Lanthanide Series in the Periodic Table. They have a spread of high-tech applications from being components of very light alloys for the aerospace industry, through inclusions in specialised glass, lasers, microwave filters, rare-earth magnets, light-emitting diodes (LEDs), medical physics contrast agents, to X-ray tubes and computer memories. That list, by no means exhaustive, also includes cell phones, green technologies and defence equipment.
But of these applications, it is probably the focus on RE magnets that has brought rare earths into the headlines. These magnets, often manufactured using powder metallurgy methods, are key components in the motors used to power electric cars. Very large RE magnets are also used in the generators of wind turbines. It does not take too much imagination to see that steeply ramping up production of must-have, high-end products can put a strain on supply sources.
A few years ago rare earths could be obtained from South Africa, Brazil or America as well as China. However, in recent years China has used cheap labour to undercut competitors, effectively forcing their closure. It is estimated that since 1990 the Chinese share of the global market has increased from around 27% to its current level where it controls around 95,% of production levels, with many of the mines located in Inner Mongolia. However, the authorities have been closing illegal mines and legal enterprises found to be polluting the environment, pressurising the market even further.
Chinese dominance of the market led a group of countries—the United States, The European Union, Canada and Japan—to file a complaint in March with the World Trade Organisation, arguing that China’s policies violate free trade rules and artificially inflate global prices.
Other allegations include speculation that China’s high international prices are meant to give local manufacturers unfair advantage and entice foreign corporations that use rare earth metals in high-end manufacturing to China.
As you might expect, this action caused quite a stir in trade/diplomatic circles, and in June the Chinese Government responded in a quite unusual way. On June 20, Xinhua, the government’s news agency, published an English-Language version of a “White Paper” promulgated by the Chinese government detailing its plans to limit exports of rare earth metals.
The document, titled Situation and Policies of China’s Rare Earth Industry, describes how a lack of proper regulation has led to excessive mining and environmental degradation in China. It claims that—due to excessive mining— most of the country’s easily accessible reserves have been depleted. To counter these problems, it said, China has put a quota on rare earth exports and increased regulation of the industry. The document goes on to claim that China possesses only 23% of the world’s reserves of rare earth metals, rather than the 50% estimated a year ago by the US Geological Survey.
The hiatus over supply has certainly sparked interest in the US, Europe, Australia and Asia in opening new sources or reopening known reserves. That includes a Japanese study last year that credibly claims production from seabed sludge is a viable source. While extraction and recycling has problems that can include the use of hazardous chemicals such as strong acids, and radioactive thorium and uranium in mine slurries, uncertainty over long-term rare earth supply has prompted leading manufacturers to seek alternatives.
General Motors, manufacturer of the Chevy Volt, is seeking alternatives, and Toyota is reported to have found a way to make electric cars without rare earths. Likewise, Renault is producing cars with electric motors that do not need permanent magnets, and Hitachi has unveiled an electric motor that needs no rare earths, but says that won’t be available commercially for two years.
It is not yet clear as to whether rare earth production restrictions will be seen in the not-so-long run to have strangled the goose that laid the golden eggs for China.
Want more on minerals? Suppliers such as KEMET, GAM, and AVX, to name a few, weigh in on the minerals resource issue.
