Rare Earth Battle Begins

China controls the rare earth market. Now, the U.S. wants to develop them.


Rare earths are back in the news.

The United States is increasing its efforts to develop and source rare earths elements (REE) to reduce its dependence on China in the arena. But this might be too little and too late for the U.S.

Found in the Earth’s crust, rare earths are critical elements used in cars, consumer electronics, computers, communications, clean energy and defense systems. The world is dependent on China for rare earth elements. China produces and controls 80% of the world’s rare earths, leaving the U.S., Europe and others in a pinch.

The situation is even more problematic amid the current U.S.-China trade war. So far, the U.S. has not included China’s rare earths on its tariff list. “China has imposed tariffs on rare earth ores and compounds imported from the U.S.,” said David Merriman, an analyst at Roskill Information Services, a research firm. “Except for the material shipped from Mountain Pass to China, there is very little trade which will be affected. China has threatened to limit exports of rare earth elements to the U.S., although there have not been similar threats made to the EU as of yet.”

Merriman is referring to MP Materials, one of the few suppliers of rare earths in the U.S. MP Materials’ rare earth mine, located in Mountain Pass, Calif., is ramping up rare earth production.

That’s not the only effort in the U.S. Among them are:
*In June, the U.S. Department of State launched the Energy Resource Governance Initiative (ERGI), an effort designed to boost the development of rare earths and other minerals worldwide. The founding partners in the group are Australia, Botswana, Peru and the U.S.
*The U.S. and Greenland joined forces to conduct an aerial hyperspectral survey for mineral exploration in Greenland. Greenland has a range of minerals, including rare earths.
*In July, U.S.-based Blue Line signed a deal with Australia’s Lynas to develop a rare earth processing facility in Texas.

Nonetheless, there are 17 elements that are considered to be rare earth elements. Fifteen of those elements are in the lanthanide series and two additional elements share similar chemical properties. They include scandium, yttrium, lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium and lutetium.

The big driver for rare earths is magnets, which are used in disk drives, electric motors in cars, wind turbines and other products. Magnets represent one-fifth of the world’s consumption of rare earths. Other end products include alloys and petroleum.

Rare earths are a cyclical business. “For the majority of rare earth elements, we see an oversupply, although this is most pronounced on the production of cerium. Neodymium is the only rare earth element which is currently experiencing a tight market,” Roskill’s Merriman said.

Neodymium is used to make magnets and lasers. Cerium is used as a catalyst, which helps refine petroleum. It is also used to make special metals.

“Prices for neodymium have stabilized around the US$45-46/kg after falling from around US$53-54/kg in June,” he said. “Praseodymium, dysprosium, and terbium have shown a similar price movement to neodymium, increasing in June before falling back in Q3 2019. Prices for lanthanum and cerium have continued to decline throughout 2019.”

Praseodymium is used to make metals, which are found in aircraft engines. Dysprosium can be used as an alloy, while terbium is used as a doping material. Lanthanum is used to make lenses.

For rare earths, the industry is dependent on China. Lynas is also a major producer. Other nations produce a fraction of these elements.

Now, the U.S. wants to develop its own rare earths and partner with other nations. The goal is to reduce its dependence on China. But is this too little and too late?

“For the U.S. to secure a REE supply chain and be capable of producing downstream REE products (particularly magnets), there will need to be a significant investment throughout the supply chain,” Merriman said. “If there is insufficient investment or financial support at any point of this supply chain, the alternative is almost always China, which would remove the U.S. control over the supply chain. The ERGI will do well to secure raw material markets, although there needs to be an adequate downstream market to support production.”

MP Materials, meanwhile, is a company to watch. MP’s Mountain Pass mine was once the world’s dominant source of rare earth minerals from the 1960s to the 1980s.

The mine has changed hands over the years. The previous owner was Molycorp, which filed for bankruptcy in 2015.

In 2017, JHL Capital Group and QVT Financial acquired the Mountain Pass mine. China’s Leshan Shenghe Rare Earth holds a minority interest in the company, which is called MP Materials. “The mine is in production, producing a rare earth concentrate that is sold into Asia for further processing,” according to an official from MP Materials. “Based on our data, we believe we are approximately 15% of the global rare earth market. By the end of 2020, we plan to restart our downstream processing facility to be able to make rare earth oxides on site. Specifically, our primary product will be NdPr (neodymium praseodymium) oxide, and lanthanum and cerium oxides and/or carbonates.”

That’s certainly a start. But the U.S. has a long way to go to reach its ultimate goal, that is, to become self-reliant in rare earths. That may never happen again.

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