Rare Earth Metals Mine is Key to US Control over Hi-Tech Future

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by
The Guardian/UK

Rare Earth Metals Mine is Key to US Control over Hi-Tech Future

Approval secured to restart operations, which could be crucial in challenging China's stranglehold on the market

by
Suzanne Goldenberg

The site of the rare earth metals mine in the Mojave desert. (Photograph: Barry Sweet/Polaris)

It's a deep pit in the Mojave desert. But it could hold the key to
America challenging China's technological domination of the 21st
century.

At the bottom of the vast site, beneath 6 metres (20ft)
of bright emerald-green water, runs a rich seam of ores that are hardly
household names but are rapidly emerging as the building blocks of the
hi-tech future.

The mine is the largest known deposit of rare
earth elements outside China. Eight years ago, it was shut down in a
tacit admission that the US was ceding the market to China. Now, the
owners have secured final approval to restart operations, and hope to
begin production soon.

"We will probably never be the largest
[mine] in the world again. It will be hard to overcome China's status in
that regard, but we do think we will be a very significant supplier,"
Mark Smith, chief executive of Molycorp Minerals which owns the mine,
told reporters during a tour of the site.

So far as the Obama
administration is concerned, the mine can't open soon enough. A US
department of energy report warned on 15 December that, in the absence
of mines such as this one, America risks losing control over the
production of a host of technologies, from smart phones to smart bombs,
electric car batteries to wind turbines, because of a virtual Chinese
monopoly on the rare earth metals essential to their production.

China
controls 97% of global rare earth metals production. Such total
domination of a strategic resource became impossible to ignore in
October when China cut exports of rare earth elements
by more than 70% over the previous year, disrupting manufacturing in
Japan, Europe and the US. Prices of even the cheapest of the 17 rare
earth elements rose 40%.

Now America, like Japan and Europe, is
desperate to find alternatives. "Reopening domestic production is an
important part of a globalised supply chain," David Sandalow, the energy
department's assistant secretary for international affairs told a
seminar in Washington.

For Smith, the official recognition of the
strategic importance of the metals was a long time coming. "I've been
going out to Washington DC every other week for about two years trying
to tell the rare earths story," he said.

They are listening in
Washington now. At the 15 December seminar at the Centre for Strategic
and International Studies, one PowerPoint presentation lingered on a
slide that showed only the Chinese flag. The room filled with nervous
laughter.

By 2015, global demand for rare earths is expected to
reach 205,000 tonnes. "If we don't get alternative supplies up and
running we are going to have this supply gap that is going to cause a
lot of issues," Smith said.

Those issues forced their way onto the
government's agenda this autumn when China began squeezing raw material
exports of rare earth minerals.

Some US media reports have
speculated China is trying to use its control over the supply lines for
political leverage. But a number of analysts say China is trying to get
better control over an expensive, dirty and dangerous mining process, and to get more factories to set up shop inside the country.

Rare earths are extracted through opencast mining and generate radioactive waste.

"I
don't believe that China is trying to chop the west off at the knees
but it has a growing internal market that is driving the demand," said
Gareth Hatch, an analyst at Technology Metal Research. "That reduces the
amount they are willing to export." That is where Molycorp – the
frontrunner for now in a global race to develop alternative production
of rare earth materials – hopes to step in.

Since going public
last July, the company has raised more than $500m (£323m) to expand its
production facilities at Mountain Pass, a collection of rusting
buildings that date from the 1950s. This month, Sumitomo Corp of Japan
invested $130m in return for guaranteed supplies of rare earths for the
next seven years. The company has also applied for department of energy
loans.

By mid-2012, Molycorp aims to produce 20,000 tonnes a year
of nine of the 17 rare earths or about 25% of current western imports
from China. Smith suggested the company could possibly ramp up
production to 40,000 tonnes within the next 18 months. He says Molycorp
has exposed just 55 acres of the 2,200 acre site.

But even
production on that scale may not be enough to guarantee the supply of
metals needed to move to a clean energy economy: lanthanum for batteries
for hybrid cars, neodymium for the permanent magnets for wind turbines,
especially offshore, europium for energy efficient lighting.

"You
would need seven mines the size of Molycorp's just to meet the demand
for wind turbines and that would mean no neodymium for motors or any
other applications," said Jim Hedrick, who until last year was the rare
earth expert at the US Geological Survey.

"Obviously there is a demand for 10 or 20 mines through the world to meet all the different demands for these products."

Some
companies, such as General Electric, are already moving to reduce their
use of rare earths. "What we are going to absolutely have to do is
diversify our sources and optimise the use of these materials in
manufacturing," said Steve Duclos, who heads GE's global research
division.

In Japan, meanwhile, Hitachi has started a recycling effort to recover rare earths from hard drives and other materials.

Aside
from raw materials, it is also unclear whether the US still has the
expertise for the complicated process of turning minerals into usable
clean tech components.

Such challenges were unthinkable
half-a-century ago when prospectors looking for uranium stumbled instead
on a rich deposit of rare earths about an hour's drive from Las Vegas.

By
the 1960s, the mine was booming, largely through sales of europium,
used to produce the bright red tones of colour televisions.

But
prices fell as China came on the market, with its low production costs. A
pipeline accident in the late 1990s, which leaked radioactive fluid
into the desert and a nearby town, led to an expensive clean-up.

The
mine closed in 2002. The central pit in the 55-acre site became a pool
of bright green water. White bales of minerals – some mined eight years
ago – were stockpiled until such time as prices would rise.

This
time around, however, Molycorp claims it has a fighting chance against
China, especially if it is able to meet its goal of complete
mines-to-magnet processing at the Mountain Pass facility.

The
company is also confident it can head off competition from a slew of new
mines due to begin coming online from Australia, Wyoming, Quebec and
South Africa. "The growth in demand for these minerals is just
phenomenal," Smith said. "A 6% average growth rate for us would be very,
very good but when you start adding things like hybrid vehicles and
wind turbines to the rare earth sectors now you are talking about double
digit growth, and you still don't know where that will end."

At
this point, though, Molycorp is not even at the beginning. "The road to
the green world of the future starts from the black earth. But first you
have to get the materials out of the ground," said Hatch. "The whole
clean-tech energy industry is hinging on it."

The
"rare earth elements" are a group of 17 naturally occurring metallic
elements used in small amounts in everything from high-powered magnets
to batteries and electronic circuits. The materials (including scandium,
yttrium and a group of elements called the lanthanides) have chemical
and physical properties that make them useful in improving the
performance of computer hard drives and catalytic converters, mobile
phones, hi-tech televisions, sunglasses and lasers.

With global demand for hi-tech goods increasing the market for rare earth elements has doubled in the past decade.

Despite
their name, rare earth elements are not actually all that rare, but
China has a near-monopoly on mining the elements. In a report on the
elements published this year, the British Geological Survey put their
natural abundance on the same level as copper or lead.

According
to the BGS China has 37% of the world's estimated reserves, about 36m
tonnes, but controls more than 97% of production. The former Soviet bloc
has around 19m tonnes and the US 13m, with other large deposits held by
Australia, India, Brazil and Malaysia.

Other sources, untapped as
yet, include Greenland. Estimates suggest the land mass could meet 25%
of global demand for REEs. South Africa also has potential for rich REE
deposits, as do Malawi, Madagascar and Kenya.

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