Japan earthquake, rare earth mining changes could change landscape for U.S.

Rare earth materials are used in everything from cell phones to wind turbines

Sometimes, when you are so far behind in a particular game of strategy, it's OK to fallback, regroup and slowly reevaluate your plan of attack .

That's about where the U.S. is right now - in the regrouping phase, as the Department of Energy this week sent about its second Request For Information plea to help it assess the rare earth materials world and develop some sort of plan of attack by year-end.

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The crux of the situation: China controls some 97% of the world's rare earth materials - and currently sells them for $44,361 a ton - almost double 2010 prices , according to the Wall Street Journal. The materials are used to build everything from wind turbines, hybrid-vehicle batteries, weapons guidance systems, oil refining catalysts, computer disk drives, televisions and monitors, compact fluorescent light bulbs and fiber-optic cable.

Rare earth materials are used in many applications for their magnetic and other distinctive properties and include 17 elements with names such as lanthanum, lutetium, neodymium, yttrium and scandium.

What the DoE is looking to do is update its Critical Materials Strategy expected later this year to include additional analysis of rapidly-changing market conditions and identify specific steps forward for substitution, recycling and more efficient use of materials identified as critical.

The Critical Materials Strategy, first released in December outlined some major concerns including:

• Several clean energy technologies — including wind turbines, electric vehicles, photovoltaic cells and fluorescent lighting — use materials at risk of supply disruptions in the short term. Those risks will generally decrease in the medium and long term.

• Clean energy technologies currently constitute about 20% of global consumption of critical materials. As clean energy technologies are deployed more widely in the decades ahead, their share of global consumption of critical materials will likely grow.

• Of the materials analyzed, five rare earth metals (dysprosium, neodymium, terbium, europium and yttrium), as well as indium, are assessed as most critical in the short term.

• Sound policies and strategic investments can reduce the risk of supply disruptions, especially in the medium and long term.

In a report on rare Earth materials last April, the Government Accountability Office said rebuilding the U.S. rare Earth supply chain could take up to 15 years and is dependent on several factors, including securing capital investments in processing infrastructure, developing new technologies, and acquiring patents -- many of which are held by international companies, the GAO stated.

The report went on to say the U.S. has the expertise but lacks the manufacturing facilities to refine oxides to metals. For example, the U.S. is not currently producing neodymium iron boron (NeFeB) permanent magnets used for computer hard drives and cell phones and has only one samarium cobalt (SmCo) magnet producer. SmCo is used a lot in what's known as a traveling-wave tube, an electronic device that amplifies radio signals.

The GAO says one existing mine -- the Mountain Pass mine in California -- could be fully operational by 2012. Although the Mountain Pass mine is the largest non-Chinese rare Earth deposit in the world, it currently lacks the manufacturing assets and facilities to process the rare Earth ore into finished components, such as permanent magnets. The mine also does not have substantial amounts of heavy rare Earth elements, such as dysprosium, which provide much of the heat-resistant qualities of permanent magnets used in many industry and defense applications, the GAO noted.

Since that report however, Mountain Pass has become operational. According to an IDG News Service report: "Colorado-based Molycorp resumed active mining of the rare earth metal facility at Mountain Pass, California in December. The site had been shutdown in 2002 amid environmental concerns and the low costs for rare earth metals provided by mining operations based in China. Molycorp, the owner of the Mountain Pass mine, is seeking to free the U.S. from its dependence on China for rare earth metals. By the end of 2012, the company is aiming to produce 20,000 tons of rare earths, likely enough to start meeting U.S. demand. Molycorp also plans on breaking ground to the construction of a new rare earths manufacturing facility at [another site this year]. China, on the other hand, produced about 124,000 tons of rare earths in 2009, according to analysts reports."

The earthquake/tsunami disaster in Japan could impact the rare earth world as well. From the Wall Street Journal: "...events in Japan have become another major focus for the rare-earth industry. The elements are used in a range of products turned out by in the world's No. 3 economy — including cars, which have cerium in their glass, lanthanum in their batteries and neodymium in their electronics. Sustained factory closures in Japan could pinch demand from the country, whose aggressive buying in recent years has reflected concern that Beijing's policies could make some materials unobtainable. The earthquake knocked share prices lower for some prospecting companies, reflecting concerns that any disruption in Japanese demand would hurt rare-earth prices and make already risky mines more difficult to finance."

Follow Michael Cooney on Twitter: nwwlayer8


Copyright © 2011 IDG Communications, Inc.

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