Challenging China in Rare Earth Minerals, Key to Clean Green High Tech
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Rare earth elements are minerals crucial to military hardware and the latest wind turbines and hybrid gasoline-electric cars,
meaning they are now, and will become increasingly, crucial for the smooth and, hopefully, rapid development of advanced clean / green technologies.
Rare earth elements are minerals crucial to military hardware and the latest wind turbines and hybrid gasoline-electric cars,
meaning they are now, and will become increasingly, crucial for the smooth and, hopefully, rapid development of advanced clean / green technologies.
Rare earth elements are minerals crucial to military hardware and the latest wind turbines and hybrid gasoline-electric cars,
meaning they are now, and will become increasingly, crucial for the smooth and, hopefully, rapid development of advanced clean / green technologies.
For approximately the last decade, China has been almost the exclusive source of these metals. [br]
But they are now being challenged by an American corporation, Molycorp Minerals, that is re-opening a mine in California’s high desert,
which was, ironically enough, closed in the early years of the decade, given its inability to compete with China’s low wages, as this article from the New York Times describes.
Molycorp Minerals, which owns the mine, announced on Monday that it had registered with the Securities and Exchange Commission for an initial public offering to help raise the nearly $500 million needed to reopen and expand the mine.
Molycorp is making a big bet that its mine — once the world leader in production of rare earth elements, but now a rusting relic — can be made competitive again.
Global demand is surging for the minerals. And customers, particularly the American military, are seeking alternatives to China,
which now mines 97 percent of the world’s rare earth elements.
As part of reopening the mine, Molycorp plans to increase its capacity to mine and refine neodymium for rare earth magnets, which are extremely lightweight and are used in many high-tech applications.
It will also resume bulk production of lower-value rare earth elements like cerium, used in industrial processes like polishing glass and water filtration.
But Molycorp, like other foundation stones of American industrial pre-eminence that have cracked or eroded under foreign competition, faces challenges that may prevent its bet from paying off.
Even riskier are efforts by nearly six dozen other companies in the United States, Canada, South Africa and elsewhere to open new rare earth mines in response to the surging demand.
Worldwide sales of freshly mined rare earth oxides, although growing more than 10 percent a year, were still only worth about $1.4 billion last year, limiting the potential sales of new mines.
Molycorp and the other companies face a challenge to match China’s low costs, a result of low wages and China’s willingness to tolerate heavy environmental damage from rare earth element mines, which have turned some areas into moonscapes. [br]
Low prices for rare earth elements from China contributed to cuts at the Mountain Pass mine before it closed in 2002.
They also discouraged most entrants to the industry until the last two years, when prices began to climb because of strong demand.
According to the Metal Pages database, cerium prices more than doubled to $4 a pound in 2007 and have barely fallen since. Neodymium prices quintupled at the same time to $23 a pound and slumped before almost fully recovering last winter.
“The pricing of the rare earths doesn’t make sense — they’ve been way too low for way too long,” grumbled John Benfield, the square-jawed senior chemical engineer at the Mountain Pass mine.
As he spoke, he watched pumps removing from the bottom of the open-pit mine a deep pond of accumulated rainwater and seepage, dyed green by mineral contamination.
Molycorp’s plan for an initial public offering, on the New York Stock Exchange, coincides with new interest in Washington on whether the United States should act to reduce its dependence on China for rare earth elements.
A Government Accountability Office report, released last week, concluded that American military hardware, including Army tank navigation systems and Navy radars, rely on rare earth elements from China.
The report made no recommendations on what policy makers should do, noting that the Defense Department planned to finish its own review by the end of September.
Representative Ike Skelton, the Missouri Democrat who is the chairman of the House Armed Services Committee, announced the same day the report was released that the committee would hold a hearing soon on the American military’s dependence on imported rare earth elements. [br]
And a bill introduced in March in the House by Representative Mike Coffman, Republican of Colorado, calls for the creation of a national security stockpile and for government loan guarantees for companies that want to mine and process rare earth elements in the United States. Similar legislation is being drafted in the Senate.
China raised concerns by reducing its export quotas for raw rare earth elements from 2005 through 2009, forcing foreign companies to buy more Chinese-made products containing or manufactured from rare earth elements.
A year ago, the Chinese government caused further alarm for Western corporations and governments by proposing a ban on the export of 5 of the 17 rare earth elements, although no ban has actually been imposed.
China’s actions have ignited frenzied investor interest.
Pinstriped investment bankers pack conferences, and newsletters promote shares, in rare earth mining companies.
But with the exception of Molycorp and Lynas Corporation, an Australian company, most of the companies lack environmental permits and mineral processing equipment,
much less the experience to handle safely the radioactive thorium and uranium that almost always contaminate rare earth ore.
