Rare Earth Rush

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Rare Earth Rush

Today we are tackling an issue full of nuance, environmental twists and diplomatic turns. This subject is so far from black and white that even the physical material we are discussing is all grey.

Back in October of last year CNBC published an article on neodymium (Nd), a rare earth metal whose world supply is currently dominated by China.  At the time, I was laser focused on hard drives, and this particular element is instrumental to their operation. The article was spurred by the escalating trade war, and a proposed 36% cut to quota, which China ended up holding off on. Regardless, a compelling case was made about US dependence. What the article did not mention was if and how we plan to address that dependence, and the other 16 rare earth elements that are also in the hot seat. Now that China is expected to announce new export quotas in the coming weeks, this is all coming back up in the news feed.

It’s hard to believe that neodymium, something that sounds like it came out of Superman #61, would hit so close to home if trade were hindered and cost were to rise, but it really is a household element without the household name. Neodymium, along with the additional 14 elements in the lanthanide series, lanthanum, cerium, praseodymium, gadolinium, promethium, samarium, terbium, europium, dysprosium, ytterbium, thulium, erbium, holmium, lutetium, plus two transition metals outside of the series that have similar properties, scandium and yttrium, are commonly used in everyday and advanced technologies. We’re talking TV’s, life saving drugs, cameras, sports equipment, automotive parts, aircraft engines, headphones, pacemakers, control rods in nuclear reactors, colorants, and tons more. As you can see just by the little bit listed, they are used in a wide range of industries.

With such an array of uses, one would be correct to assume that demand has risen over the years, and power has shifted. In the 1950’s the leading producer was South Africa, with a mine located in California, producing a small amount coming in second. Once color televisions came into the picture, power shifted to the California Mine, Mountain Pass Mine. That mine holds bastnasite which contains europium that is used to make the red color variance in color TVs. In the 90’s, China became the world leader, driving out many competitors, including Mountain Pass, with very low prices.

You would think that extraction of these metals would be more prevalent, but the fact is, while they are not technically rare, they are generally found in small deposits that make them difficult to mine in an economically feasible way. China is not only the main producer, but also the main consumer of these elements, using these metals in production of electronics domestically and globally, so it makes fiscal sense for them to go through the costly and cumbersome process. They are also not one to shy away from using their dominance in this field when they feel the situation calls. For instance, in 2010 a Chinese fishing boat collided with two Japanese Coast Guard ships off the Senkaku Islands; disputed territory between Japan and China. As tensions rose, China essentially stopped exporting rare earth products to Japan raising the price by a whopping 3,000%. This sparked Japan to invest in new mining processes as a strategic investment, which is a long process and a bit of a drop in the bucket, but it’s a start.

We, as a country, may want to take heed and begin looking into processing some of this material ourselves, in addition to increasing the amount we recycle and improving upon that process for domestic use. We would naturally still rely on China for the vast majority of these types of imports, but we could potentially have a reliable and steady flow of domestic material to source from as well. If we were to go down that road though, there is the potential for massive environmental and health impacts. Not only is the ore laced with radioactive material, but the mining emits sulphates, ammonia, and hydrochloric acid; processing of this material leads to 2,000 tons of toxic waste to every one ton of rare earth produce, it’s not a clean or easy process to say the least. Reports of toxic water and air, plants refusing to bear fruit, and illnesses have run rampant in places near mines like Baotou, the largest source of rare earth material in Inner Mongolia. Regardless of regulations or any legislative measures that might be put in place, we would likely still be looking at a hefty environmental impact.

There is just no easy answer here. Do possible environmental impacts outweigh the need for independence? What is the likelihood that China will impose high tariffs or nearly halt export altogether? If that were to happen, would we be able to get substantial enough projects off the ground quickly enough? Should we smooth tensions and work on our own programs in the background? There are many caveats, lots of variables, and very few, if any, easy answers.