Rare Earth Elements (REEs) and their availability have been much in the news recently. There seems to be a lot of confusion and misunderstanding about what these are, where they are used, and what the supply issues are. I will try to clarify some of these issues.
First, here are a few basic facts about rare earth metals:
- Rare earth elements are not "rare" and they are not "earths." They are, in fact, a series of non-ferrous metals that are widely distributed in the environment. Most of them are as common as copper, and even the rarest is more common than gold. There is no shortage of these elements in the Earth’s crust. What is rare is commercially viable concentration of ores. Fortunately for the United States, most of the commercially viable deposits reside in North America and China.
- Today, China is the primary source of REEs. Although the United States was self sufficient through the 1980s, the last US refinery closed in the mid 1990s and the last mine closed in 2002. Today, the US produces no rare earths, although it continues to ship ore to Japan from its above-ground reserves.
- REEs are widely used in emerging "green" technologies. Each hybrid Prius from Toyota is reported to contain 66 pounds of REEs. REEs are widely used in wind turbines, compact fluorescent lamps, flat panel displays, catalytic converters, motors, and magnets. Military uses include radar and guidance systems
- Supplies are tight. Significant shortages are looming.
- There are no substitutes.
China currently supplies more than 90 percent of all REEs. Total world demand in 2010 is estimated at 130,000 tons, while total production will be about 120,000 tons. The shortfall is being met with recycling and depletion of stockpiles. Demand is expected to rise to 180,000 tons by 2012 and more than 200,000 tons by 2014, while Chinese production is expected to top out at 160,000 tons.
By 2012 or earlier China’s internal demand will exceed its production. In July 2010, China announced it will reduce exports by 72 percent. There are today no other sources for these REEs. Headlines were made recently when China allegedly halted shipments of REEs to Japan to protest a fishing dispute. Japan reportedly quickly capitulated and released the fishing crew, in order to resume shipments. This may be a preview of the next few years as China reserves its supplies for internal production and the rest of the world scrambles to develop new sources.
The US was not only self sufficient through most of the last century, it actually supplied the majority of the world’s needs for these REEs. Increasing environmental costs and low-priced competition from China conspired to shut down the industry in North America. There was little notice taken at the time as usage of these REEs was low and supplies seemed assured from an undeveloped China that was content to export raw materials.
The emergence of China as an industrial nation and the development of an internal environmental design and manufacturing capability should have sounded an alarm bell -- and might have -- had the economic slowdown not masked the growing disconnect between exploding usage and source insufficiency. Now the world is awakening to a "green revolution" where demand for REEs is skyrocketing and supplies are stagnating. Clearly, new sources for these essential REEs need to be developed.
In Part 2 of this column I will discuss options for mining rare earth elements and suggest what corporations can do to guarantee supplies.