Clean tech industry boosts demand for rare earth minerals
Published: Thursday, February 24, 2011
Updated: Tuesday, November 20, 2012 22:11
In the Mojave Desert just off Interstate 15 on the way to Las Vegas, workers are digging for dirt that may be worth far more than a casino full of chips.
The massive hole is about to get even bigger. Molycorp Inc., which owns the open mine, plans to dig out about 40,000 tons of dirt a year by 2014, up 1,200 percent from the current rate of about 3,000 tons.
The Colorado company is boosting production to meet an insatiable global appetite for rare earth elements — minerals that have become a hot commodity because they're used in all kinds of electronics, including smart phone touch screens, wind turbines and fuel cells.
The U.S. clean-tech industry, which relies heavily on the minerals, is elated by the stepped-up production rate, but some believe it is not coming soon enough. In recent months the industry has been in a bit of a panic after China, which produces 97 percent of the world's supply of rare earths, slashed its exports to a trickle to feed its growing domestic needs.
Rare earth shortages could cause companies already weakened by the recession to shrivel or stall, industry officials say. Molycorp's Mountain Pass mine produces about 3 percent of the world's rare earths, but the company plans to eventually turn out a quarter of the total supply.
"The use of these materials has really skyrocketed, with demand outstripping supply literally overnight," said Molycorp Chief Executive Mark A. Smith. "We've got some serious issues in this industry. It's going to be a tough year."
The mine, about 16 miles from the Nevada border, has one of the world's largest deposits of rare earth elements outside Asia and is the only commercial producer in the Western Hemisphere. The elements — 17 total, all with tongue-twisting names such as neodymium and dysprosium — are crucial to the clean-tech and high-tech industries.
Rare earth elements aren't actually rare, having picked up the misleading name in the 18th and 19th centuries before it was clear how common they actually are. Cerium, one of the elements that is sometimes used as a catalyst for self-cleaning ovens, is more abundant in the Earth's crust than copper or lead.
But mining for rare earths is difficult and expensive. The elements are usually found scattered in small fragments among rocks and must be separated and then processed.
The procedure is rarely eco-friendly, creating hundreds of gallons of salty wastewater per minute, consuming huge amounts of electricity, requiring toxic materials for the refining process and occasionally unearthing dirt that is radioactive.
The high costs and damaging techniques pushed most rare earth mines out of business in the early 1990s. Only China kept its mines going, positioning itself for the ensuing high-tech boom and the resulting rare earth-hungry products.
"Bottom line, we fell asleep as a country and as an industry," Smith said. "We got very used to these really low prices coming out of Asia and never really thought about it from a supply-chain standpoint."
But recently, China began cracking down on illegal rare-earth mining operations that had cropped up there because of the high demand. As shipments of the materials dwindled in the last year, prices have soared. Cerium, for example, jumped more than 600 percent, from less than $10 a kilogram to nearly $70.
The supply squeeze has raised tensions in the delicate relationship between the U.S. clean-tech industry and its Asian counterpart. The U.S. trade representative's office has said that if China continues to rebuff requests to ease export limits on rare earths, it may take the dispute to the World Trade Organization.
"We better get on the ball here, or our green industries are going to be at the complete mercy of China," said Jack Lifton, co-founder of the rare commodities research firm Technology Metals Research.
Many hope the Mountain Pass facility will help loosen China's chokehold on rare earths mining and manufacturing. Investors recently pushed Molycorp stock to $50 a share from its $13.25 debut price in July.
The company is spending more than $500 million to modernize and rebuild the 2,200-acre facility. The project is expected to create hundreds of permanent jobs and eventually produce rare earths at cheaper rates than mines in China.
The California mine was discovered in the 1940s by uranium prospectors and at one point became the world's largest supplier of rare earths as the demand for europium, which is used for color television screens, surged in the 1960s.
But the mine went dormant for several years after an uproar over environmental concerns in the early 2000s. Mining efforts left mounds of tailings, or leftover dirt, around the property.
Molycorp is now cleaning up the site, implementing a water recycling program, constructing an on-site natural gas power plant and planning to work the tailings back into the surrounding landscape.
San Bernardino County officials hope the activity attracts battery manufacturers and other clean-tech companies, creating a hub of research and innovation in the area.
The U.S. rare earths industry is hoping other domestic mines will open.
The U.S. Geological Survey has identified several sites where rare earths could be mined. Congress is considering proposals, some pushing for loan guarantees for rare earths suppliers, to encourage more domestic research and production. Other countries, including Australia, Canada and Brazil, are also on the hunt for more sites.
But developing a new mine from scratch requires prospecting, exploration, permitting and construction.
And even if more mines open in the U.S., the country has few companies that can process rare earths, use them to manufacture batteries and magnets and work them into products. Without a domestic supply chain, most of the material extracted in the U.S. would have to be shipped overseas anyway.