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March 1, 2011

Out of the Woodwork

China is squeezing the market for rare earths. Guess what happens next.

In the largely male domain of global commodity markets, traders are fond of an ancient adage that applies today as China tries to squeeze the world market for important “rare earth” metals. “No man is bigger than the market,” they say, and what they mean is that once any person, group or country tries to create shortages and force prices higher, something always happens to demonstrate their folly.

So it is today with rare earth elements, which, because of their unusual and highly desirable properties, are essential for products such as smart phones, hybrid car batteries, magnetic resonance imagers, jet fighter engines, missile guidance systems and other weaponry. China dominates the market and is doing everything it can to raise prices, lower supplies and bring to heel Japan and other nations that depend on the Chinese for rare earth supplies.

No surprise, then, that solutions to the problem are suddenly popping up in best free enterprise style. Old mines are expanding, new ones are in the exploration phase, and scientists are developing a range of solutions.

The 17 rare earth metals are abundant globally, but not often in marketable concentrations. China, with one-third of the world's reserves, holds 97% of the market. China reduced export quotas by 40% in 2010 and again by 35% this year. Production is down by government decree, and Chinese stockpiles are growing while the rest of the consuming world fumes.

The United States allowed its own production capacity to decline (see “Mission Impossible,” Forward, January-February 2008). The U.S. Department of Energy, in a December report, confirmed that rare earth users are at risk of major supply disruptions.

It was not always this way. The Mountain Pass Mine, in eastern California's Mojave Desert, holds up to 20 million tons of the metals and was the world's primary source until the mid-1980s. But increased production and lower costs in China, along with regulatory problems stemming from hazardous waste spills, led to China's near-total dominance in the rare earth markets by the turn of this century. Mountain Pass closed in 2002. Colorado-based Molycorp Inc. has resumed production and plans to expand its output to as much as 40,000 tons annually by 2013.

In the meantime, because of Chinese pressure, companies and materials scientists in the United States and Japan are looking for alternatives that perform as well, or nearly as well, as rare earths in powerful magnets, display screens and other technology. Small quantities of dysprosium can make magnets weigh 90% less, for instance; terbium's high luminosity improves the energy efficiency of fluorescent lighting.

At Northeastern University in Boston, nanotechnologists are working at the atomic scale to mimic the high electrical conductivity, magnetization and other characteristics that make the rare earths so valuable, says Laura Lewis, Ph.D. and chair of the Chemical Engineering Department. While their unique atomic structures can't be replaced, rare earth alloys could achieve the same results as rare earth magnets, maintaining the
necessary balance between magnetic strength and magnetic permanence.

Along with developing novel materials, researchers are turning to the periodic table for inspiration. The University of Delaware leads a three-year, $4.4 million multi-institutional project funded by the Advanced Research Projects Agency-Energy (ARPA-E), an office of the U.S. Department of Energy. The project involves several initiatives, including alloys of rare earths and transition metals, such as titanium, cobalt and nickel, many of which have never been studied because of their high reactivity and toxicity. Another project seeks alloys stabilized by the addition of non-magnetic atoms rather than rare earths. In one example, researchers at the University of Nebraska seek to enhance iron-cobalt permanent magnets with other elements.

Companies are working on substitutes as well. Using ARPA-E funding, Niskayuna, New York-based GE Global Research studies the use of nanopowders, aggregates of ultrafine particles, to build new composites. Electron Energy Corporation, based in Landisville, Pennsylvania, and which bills itself as the only American rare earth magnet producer, is also using ARPA-E funds to study alternatives.

Rod Eggert, professor of economics and business at the Colorado School of Mines (CSM), says the search for substitutes doesn't mean a solution is near.

“It's rarely as simple as substituting another element for a rare earth element. It's usually more of a systems challenge,” he says. For example, swapping elements in a samarium-cobalt magnet would be more complicated than removing the samarium and replacing it with lead or copper. It would require designing a material with the same magnetic properties, which could conceivably be done by designing new alloys or nanostructures, Eggert says.

Recycling and recovery may be a useful approach. At Toshiba Corp. in Japan, researchers have attempted to recover rare earths from the byproducts of uranium-fueled nuclear reactors. The University of Tokyo and Osaka Prefecture University are studying the recovery of rare earths from industrial byproducts, and Hitachi, Mitsubishi and the University of Tokyo have begun magnet recycling programs. CSM's Eggert says researchers at the university have been studying the recovery of rare earths from recycled magnets and fluorescent light bulbs. “In those applications, the rare earth is in a material that is reasonably easy to separate from the rest of the products,” he says. “But at present, there is almost no recycling of rare earths from these products.”

In addition to the Mountain Pass Mine, Salt Lake City-based U.S. Rare Earths Inc. is one of a few remaining privately held North American rare earth concerns.  “Any rare earth production that opens up outside of China will alleviate some of the problems that are going on now,” says Ed Cowle, chief executive officer. “In the United States, further production would be beneficial — private companies want to buy domestically.”

Mining is also expanding elsewhere. In March, Sydney, Australia-based Lynas Corporation, Ltd. aims to start processing previously mined ore from its Mount Weld mine in western Australia. Drilling for new ore will begin by the second quarter of 2011, the company says. Eggert says the mine is expected to produce between 10,000 and 20,000 tons of rare earths. 

Even with robust investment, new mines can take up to eight years to open, Cowle says. Last spring, the Government Accountability Office said it could take 15 years to wean the United States off a foreign rare earth supply.

 “Over the next year or so, most production is going to come from China. The geographic diversification of production is going to take place only gradually, over a period of several years. But the fact that it is a relatively small market to begin with means that a couple of mines can make a significant difference,” Eggert says.

Meanwhile, materials scientists like Lewis are plugging away. Her research into rare-earth-free magnets is high-risk and high-reward, she says.

“It's challenging, and I think if we see something positive, that's great, but we're not there yet,” she adds. “With the tools of nanotechnology, we've come such a long way in terms of synthesis, tools and probes; we think we'll be able to do it.