A tale of two rare earth countries
Why China controls and US imports critical high-tech metals Metal Tech News Weekly Edition – January 15, 2020
Last updated 6/27/2020 at 5:07am
Unique, remarkable, magical and irreplaceable are some of the adjectives uses to describe rare earths – a group of 17 elements with names most of us have never heard of but have seemingly mystical magnetic, electrical and luminescent properties we use every day.
"There are literally hundreds of uses for rare earths – they are unique materials, almost alchemistical magic," said Michael Silver, CEO of American Elements, a Los Angeles-based distributor of rare earths and thousands of other advanced materials.
While scientist have long realized that rare earth elements, or REEs for short, possess distinctive characteristics that set them apart from their fellow elements, it wasn't until the advent of the color television in the 1960s that these exceptional properties had any sort of widespread practical application.
"Europium, for example, which is what is used to create the color screen, was the first rare earth to be used by man," Silver explains.
Over the ensuing five decades, the unique properties of this group of outcasts have found their way into nearly every high-tech device you can think of – from speakers that deliver rich sound but are small enough to fit in your ear, to enormous wind turbines delivering high-efficiency green-power generation to electrical grids around the world.
"Because of their unusual physical and chemical properties, the REEs have diverse defense, energy, industrial, and military technology applications," the U.S. Geological Survey (USGS) wrote in a 2018 report on minerals and metals considered critical to the United States.
Understanding rare earths
So, what exactly are rare earths? We tend to talk about them as a single unit, but they are actually 17 separate elements – each with its own distinct traits.
Most REE deposits contain some mixture of all the elements considered rare earths, which includes 15 lanthanides – the group of elements in their own row at the bottom of the periodic table –along with scandium and yttrium – a pair of elements that are commonly found in REE deposits and have similar characteristics.
The lanthanides are divided into two categories, heavy and light rare earth elements.
Light REEs make up the first seven elements of the lanthanide series and include lanthanum, for which the series gets its name; cerium, used for polishing high quality optical surfaces; praseodymium, valued for its magnetic and optical properties; and neodymium, an extremely magnetic element.
"The most powerful magnet known to man is a neodymium magnet, one of the rare earths, so all electric cars have neodymium magnets in the electric motors," said Silver.
The remaining eight lanthanides are considered heavy REEs, which are less abundant in most deposits and tend to be more valuable.
Some of the most commonly used of these heavy rare earths are europium, used primarily in red and blue phosphors in televisions and computer monitors; terbium, used in high-temperature magnets and to create a green phosphor; and dysprosium, which improves the durability of magnets in electric vehicle motors and wind turbine generators.
Then you have scandium, which when combined with aluminum becomes an extremely strong yet lightweight alloy used to make everything from Mars orbiters to baseball bats.
Finally, there is yttrium, an element that has numerous rare earth-esque attributes such as creating a red phosphor for televisions and other displays, as well as garnets used in lasers.
While scientists all around the world were finding new ways to use rare earths during the last four decades of the 20th century, it was China that fully realized how critical these elements would be to future technologies. By the 1980s, the Middle Kingdom was unwaveringly committed to becoming a world leader in all things rare earths.
"The Middle East has its oil, China has rare earth," Chinese leader Deng Xiaoping said. "China's rare earth deposits account for 80 percent of identified global reserves, you can compare the status of these reserves to that of oil in the Middle East ... we must be sure to handle the rare earth issue properly and make the fullest use of our country's advantage in rare earth resources."
In the years to follow, China did just that. During the 21st century, China had a near total monopoly on the mining and separation of rare earths.
"China has been the leading producer of REEs for decades and since the late 1990s it has accounted for more than 90 percent of global production, on average," the United States Geological Survey penned in a 2018 report on minerals critical to the United States.
When it comes to raw materials, the rare earths market is miniscule in relation to the American and Chinese economies.
According to the USGS, the United States imported US$137 million worth of rare earths metals and compounds during 2017. This is less than 1 percent of the value of the US$13.9 billion of soybeans America shipped to China that same year.
While the REE market may be relatively small, high-tech manufacturers and the Pentagon took notice when China President Xi Jinping issued a thinly veiled warning that the Middle Kingdom may restrict exports of rare earths during a mid-2019 visit to a high-tech rare earth magnetic materials facility in China's Jiangxi province.
Spice of life
The concern over potential restrictions of Chinese rare earths is because these elements are the spices of modern high-tech, green energy and military hardware. Just like a little salt, garlic and red pepper transforms tofu from bland to spicy, a dash of rare earths makes modern devices smaller, more powerful and versatile than ever.
Rare earth magnets, such as those produced at the 284-acre facility visited by President Xi, allow headphones small enough to fit into your ear to deliver high-fidelity sound; smartphones to vibrate; Tesla cars to travel 250 miles between charges; wind turbines to delivery electricity more efficiently; and magnetic resonance imaging (MRI) to create detailed images of organs and tissues for medical diagnostics.
Other REEs make color televisions and monitors possible; add strength and hardness to lightweight alloys used by the aerospace sector; and enhance lasers used for a wide variety of purposes, from removing tattoos to guiding precision munitions.
This is a small sampling of the growing number of modern applications that are spiced by rare earths.
These end uses are the foundation of China's four-decade-long strategy to control REE mining, separation and products that use these technology metals.
"It will take many years if the US wants to rebuild its rare-earth industry and increase its domestic supply to reduce its dependence on China's minerals," Global Times, a newspaper focused on Chinese government views on international events, penned in an article in mid-2019. "That's long enough for China to win a trade war against the US, during which time China's monopoly on the production of rare earths will help Beijing control the lifeblood of the US high-technology sector."
While this passage could be viewed as propaganda, Beijing has a strong enough grip on the sector to make life difficult for companies trying to establish rare earth mines and processing facilities outside of China.
Just as easily as it can shut off the tap on rare earth exports, Beijing can flood the market with the tech metals – which, in turn, can cause dramatic shifts in the price of rare earths and the financial wherewithal of companies trying to develop mines and processing facilities outside of China.
Controlling the supply chain
The Mountain Pass Mine in California's Mojave Desert has been the victim of the price fluctuations caused by the ebb and flow of China REE exports.
Mountain Pass rose as the dominate supplier of rare earths in the 1960s, a position the mine held until China set its rare earths strategy into motion. Chinese competition, coupled with U.S. environmental regulations driving up costs, forced the Mountain Pass Mine to wind down operations in 2002.
Molycorp, an American company, announced plans to re-open Mountain Pass in 2010, once again providing the U.S. with a domestic REE supply.
This plan was bolstered by China's decision to restrict exports of rare earths due to a dispute with Japan, sending the price of these elements skyrocketing.
For example, europium oxide rose from US$475 per kilogram in 2008 to a peak of US$3,800 in 2011. Today, this mineral used as a red phosphor in televisions has fallen to about US$230/kg earlier this year. Most of the rare earth oxides – including dysprosium, terbium and neodymium – followed similar tracks.
Likewise, Molycorp stock rocketed from around US$10 per share in April 2009 to US$74 a share one year later. By 2015, stock in the American rare earth miner had plummeted to less than US10 cents per share and the company was forced to file for Chapter 11 Bankruptcy.
One rare earths expert contends that Molycorp's troubles were largely a product of dumping too much money into restarting the California rare earth mine and not enough into the needed supply chain infrastructure.
"The fundamental reason for the failure of Molycorp has been its business model's lack of recognition of the fact that China's success in monopolizing the rare earth space is due entirely to its constructing a total domestic rare earth supply chain feeding into the huge Chinese domestic end user manufacturing industry," Jack Lifton, a technologies metals consultant, wrote at the time.
The rise and fall of Molycorp was a common theme for REE-focused companies around the globe. For China, this provided an opportunity to acquire assets outside of its borders.
A Chinese state-owned mining company made a bid to buy controlling interest in Lynas Corp., which mines rare earths in Australia and owns the only REE processing facility outside of China. Australia's Foreign Investment Review Board, however, stepped in and stopped the deal, citing concerns that the purchase could result in restricted supplies to non-Chinese buyers.
China-based Shenghe Resources Holding Co. did nab a minority holding in MP Materials, a company that arose from the ashes of Molycorp and resumed operations at Mountain Pass last year.
While MP Materials has restarted rare earth production on American soil, the Mountain Pass REE concentrates are still shipped to China to be separated into the individual rare earths that can be used to make smartphones smarter, wind turbines more efficient, electric vehicles travel further and guided missiles to hit their mark.
EDITOR'S NOTE: Australia, Canada and the United States are working together to establish a rare earth supply chain outside of China. Future Metal Tech News articles will provide further details of this collaboration, as well as REE policies and projects in each of these countries.