Too Many, Too Few Rare Earths

A team from Japan recently made a major discovery—they found massive deposits of rare earths on the ocean floor off the coast of Japan.

The team of Waseda University, the University of Tokyo and the Japan Agency for Marine-Earth Science and Technology (JAMSTEC) found a deposit that equates to 16 million tons of rare earths. Rare earths are a group of critical materials used in various electronic products.

Initially, the discovery was hailed as a major event. Many saw that the finding could potentially break China’s monopoly in the rare earths market. In fact, China controls roughly 80% of the world’s rare earths.

Or will it change the landscape? The problem is that the deposits lie at a depth of 5,700 meters in the ocean. And it would take millions of dollars to extract them from the ocean floor, raising some cost and environmental concerns.

So for now, the discovery won’t change the landscape for rare earths. “On the supply side, this development is expected to have little impact on the industry,” said David Merriman, deputy manager of the Battery & Technology Materials division at Roskill Information Services, a market research firm. “Pricing wise, we also expect to see little impact.”

Still, customers need to keep a close eye on the situation in what has become a long-running saga in the field of rare earths.

Rare earths are chemical elements found in the Earth’s crust. They are used in cars, consumer electronics, computers, communications, clean energy and defense systems. The big market for rare earths is magnets. In semiconductor production, rare earths are used in high-k dielectrics, CMP slurries and other applications.

There are 17 elements that are considered to be rare earths 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.

“Rare earth resources are not scarce despite their name and there are sizeable rare earth deposits on all continents which have the benefit of not being 4 km under water,” Roskill’s Merriman said. “The largest challenge in the rare earths industry is not raw material sourcing, but the processing of those raw materials into useable separated rare earth products, which is what China has excelled at and maintained a stranglehold over.”

For some time, China has dominated the market and controls the world’s supply. Suppliers outside of China have found it difficult to compete amid stiff competition, low prices and a glut of capacity in the market.

Meanwhile, the rare earths market made big headlines in April, when the team from Japan discovered a massive deposit in an economic zone off the Ogasawara island chain. This is 2,000 kilometers southwest of Tokyo, according to a report from Asahi Shimbun. The deposits, estimated at 16 million tons, include rich supplies of yttrium, europium, terbium, and dysprosium, according to the journal Science Reports.

The deposits could meet global demand for centuries, according to the reports, but the market shouldn’t get its hopes up, and for good reason–it is a major challenge to extract those deposits deep on the ocean floor.

“The presence of rare earths in deep sea muds has been known for some time though they have not really been taken any further than their initial identification,” Merriman said. “Not only is it likely that capital costs, operating costs and technical expertise to extract mineralization from the sea floor would be challenging, the challenge and cost of processing and separating rare earths into useable products, which has formed a stumbling block for many rare earth development companies, remains.”

There is another problem. “The environmental impact of dredging 2,500km2 of the sea floor would also need to be assessed prior to any development.”

Bottom line: ‘’It’s likely that this development will have little impact on China’s control of the rare earths industry, though the development and expansion of ‘on-land’ rare earth operations and projects are expected to erode China’s dominance over the coming decade,” he said. “There are many more viable options for rare earth projects to be developed around the world than extracting muds and clays from the sea floor.”

Rare earths are only just a few of the big issues in critical metals and materials. As reported, the overall market for critical metals are becoming turbulent, creating shortages and widespread supply chain concerns.

Many critical metals are also scarce, and there is high risk associated with their supply. In a recent report, the European Union (EU) lists 27 different raw metals/materials that are considered critical for systems and devices, including cobalt, gallium, germanium, graphite, hafnium, tantalum, tungsten and various rare earths.

The EU, the United States and others must import a large percentage of these raw metals/minerals from China, Congo and other nations. The reliance of these commodities presents a range of supply chain issues that can affect specific products, broad markets, and in some cases spark national security concerns.

In December, the Trump administration signed an executive order to reverse the trend of increasing dependence on foreign imports of critical minerals and metals in the U.S. The move aims to identify new sources of critical minerals. The administration also hopes to streamline the leasing and permitting process to expedite production, reprocessing and recycling of minerals at all levels of the supply chain.

To be sure, critical materials and metals are important. Finding sources of supply remain even more important amid the fast changes in the electronics market.