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Yves here. Reports of China successfully suppressing the world’s rare market and the lack of strong alternatives are overshadowed by how the US has given up its position in the world’s rare market, as the US has declined significantly in recent decades. From a 2010 post:
Reader James S. highlighted a helpful article in the MIT Technology Review, “Is the US Rare-Earth Industry Rebound?” Our only problem with this strong piece is its summary, which emphasizes some critical aspects of the article:
The US has an abundance of key metals for many green energy technologies, but engineering and R&D technology has moved overseas.
In fact, while the article discusses US versus foreign engineering expertise in rare earth mining, it describes in detail how difficult it is to mine rare earths in general (more precisely, not the part of finding the material, but separating it) and the additional big obstacles that come with doing it the wrong way to spoil the environment. So the rub is not only to get some pieces of technical knowledge, but also to break the additional basis of reducing environmental costs.
And this issue has been brought up many times in the narrative of why rare earth production moved to China in the first place. It’s bad, and the developed economies didn’t want to do the job. China was willing to take environmental damage. For example, the New York Times says:
China feels entitled to call the shots because of a brutally simple environmental calculation: It currently controls the supply of rare earth in the world not only because of geologic luck, although there is more to it, but because the country was willing to make a mess. , a toxic and often radioactive activity that has long been shunned around the world.
From MIT Technology Review:
Going from the rocks to the pure metals and alloys needed for production requires several steps that US companies don’t have the infrastructure or intellectual property to do….
In the 1970s and 1980s, the Mountain Pass mine in California produced more than 70 percent of the world’s supply. But in 2009, none were produced in the United States, and it will be difficult, expensive, and time-consuming to scale up again…
Two mines that will ramp up production soon are Mountain Pass, which is being developed by Molycorp, and Mount Weld, which is being developed by Lynas, outside Perth, Australia. Mountain Pass has a limit that has been established. But the company cannot use the processes used in the heyday of mining: they are both economically and environmentally unsustainable.
There are several factors that make it difficult to clean a rare earth. First, all 17 elements often occur together in the same mineral environment, and because they have similar structures, it is difficult to distinguish them from each other. They often occur in deposits of radioactive elements, especially thorium and uranium. Those features can be a threat if the “tailings,” the muddy waste product of the first step in separating the rare earths from the rocks they’re found in, aren’t handled properly…
Mountain Pass declined in the 1990s when Chinese producers began to reduce the amount of the mine at the same time as it had safety problems with the pillars. When the Mountain Pass mine was fully operational, it produced 850 gallons of contaminated salt water containing these radioactive elements every hour, every day of the year. The tailings were transported down an eleven-kilometer pipeline to evaporation ponds. In 1998, Mountain Pass, then owned by the oil company Unocal, suffered a tailings leak when a pipeline burst; four years later, the company’s permit to store the remains expired.
At that time, in the 1990s, Chinese mining used its power in the rare world market. The Chinese began excavating elements as a byproduct of an iron ore mine called Bayan Obo in the northern part of the country; getting both products from the same site helped keep prices down initially. And the country invested in R&D about the processing of rare materials, eventually opening several small mines, and encouraging producers who use these metals to create resources in the country.
After the current post. The second issue is the negligence of the US in providing or financing and supporting sources of supply ministers reliable partners, given the importance of the rare earth in defense production. But given the inability of the US and its NATO allies to meet Russia’s military production and how the exit gap is growing in favor of Russia, it also shows that our honest leaders cannot plan their way out of the paper bag.
By Jennifer Kary of MetalMiner, the largest metal-related media site in the US based on third-party ranking sites. Originally published at OilPrice
- China’s restrictions on rare earth mining and exports have disrupted global supply chains and driven up prices.
- American businesses, especially in the defense sector, are vulnerable to this disruption because of their reliance on the exotic world of China.
- Transforming supply chains, investing in domestic production and recycling, and exploring alternative technologies are important risk mitigation strategies.
The Rare Earths MMI (Monthly Metals Index) managed to bounce back and rise 8.66% after a strong decline since May. Many elements of the rare earth index have withdrawn price action, including neodymium and terbium oxide. China’s recent reduction in rare earth supplies has caused a shift in the global market, creating an important look at short-term, weekly trends in the MetalMiner newsletter.
China’s crackdown on the exotic world is causing prices to rise
In the past few months, China’s attack on rare minerals and its extensive tightening of controls have caused problems in global markets. China has long dominated the world’s exotics market, producing nearly 90% of the world’s refined products. This dominance allows Beijing to greatly influence global supply chains for key minerals such as neodymium, praseodymium, and dysprosium, elements important in magnets used in everything from electric cars to wind turbines.
One of China’s main rare earth production centers, Jiangxi, is among the provinces that led a four-month crackdown on illegal mining. While the reduction of illegal mining benefits the market in the long run, it also increases the prices of rare earths in the short term.
The Supply-Demand Crunch
Many expect the demand for exotic earths to continue to rise with the push for green energy. In fact, some analysts are predicting a supply-demand conflict due to this continued global growth. China’s recent actions to crack down on illegal mining and tighten regulations have put new pressure on the global REE market.
Some analysts predict that the rare earth market will move from a surplus to a global deficit by the end of 2024. A smaller number also anticipates a potential global shortage of 800 metric tons of NdPr, an important component of permanent magnets, by the end of the year. At the same time, China’s decision to reduce the production rates of rare earth materials will likely widen this gap and raise prices.
The US Defense Sector is at risk
China’s restrictions on exporting rare earth processing technology have also caused supply chain problems for defense contractors, making it difficult to secure a reliable source of construction materials. Businesses like Raytheon and Lockheed Martin need rare earth materials for military jets, radars, and missile systems. Recognizing this risk, the US Department of Defense has warned of the national security risks associated with over-reliance on China’s exotic world.
What US Businesses Can Do to Reduce Risks
While relying on the exotic world of China presents challenges, US companies have options to reduce their exposure and prevent financial losses.
First, US companies must increase the diversity of their supplier networks. Countries such as Australia, Brazil, and Canada also hold significant global reserves and continue to increase production. In recent years, companies such as Lynas Rare Earths of Australia have become important alternative suppliers, particularly of neodymium and praseodymium.
Meanwhile, the US government continues to encourage domestic production of rare earths to reduce dependence on Chinese suppliers. MP Materials, which operates the rare earth mine Mountain Pass in California, is playing a key role in this effort. The US Department of Defense has invested in building local rare earth processing plants to ensure the country can get these resources at home.
Another strategy involves the recycling of rare earth elements from products that have reached the end of their life cycle. Although rare earth recycling technologies are still in their early stages, they hold significant potential as a long-term solution to supply chain challenges. Companies in industries such as technology and automobiles, which handle large products that contain land, can benefit from investing in recycling infrastructure to recover these valuable items from old electronics and cars.
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