Rare earths revisited: Monopoly broken but security issues remain

imagesAs readers of my blog know, I have an abiding interest in rare earth metals, since they are such a fundamental source of technology for use in computers, TV and other displays, windmills, medical imaging….the list goes on and on.  As a quick review, these elements (divided into “light” and “heavy” so-called lanthanides) are found abundantly in nature as metal oxides in different amounts and concentrations. They are almost exclusively produced in China, where they are found in large amounts and where the complex processing and separation of the oxides has long been perfected.imgres As industrial use blossomed, China’s monopolistic position allowed that country over a short period of time, to raise prices to unsustainable levels ($ 100-200 per kg) as it imposed export quotas on these metals.

An article in the July 27th issue of Chemical and Engineering News brings the situation up to date. Two companies, Molycorp in the U.S. and Lynas in Australia, decided to  invest large amounts of capital to produce rare earth metals, using the high global pricing to justify these investments. When the World Trade Organization declared Chinese export quotas to be illegal, the price of many of the metals dropped precipitously to the range of  $ 2/kg to $ 18/kg!  Molycorp, which was starting to produce at low levels, recently declared bankruptcy and Lynas is facing a similar problem, as well as local environmental opposition to its Malaysian rare earth refinery for Australian oxides, based on the fact that rare earth oxide concentrates from some ores contain some radioactive thorium and uranium.

Molycorp has the additional problem that its Mountain Pass, Ca. mine ores primarily contain oxides of cerium and lanthanum, which are used in catalytic converters and for various polishing applications and command the lowest prices. The ores also contain  neodymium and praseodynium in reasonable quantities and this metal is more attractively priced, used in electric motors, sensors and disk drives. Gadolinium, yttrium, dysprosium and terbium and europium are even more attractively priced and it turns out that these oxides are found in some Alaskan ores, apparently attracting some other investors.

So, China still has the monopoly on rare earth metals, though it is no longer able to realize “monopolistic” pricing. Instead, it has priced these metals at a low enough level (while exporting as much as possible) to try and force its competitors out of business.

The good new for the U.S. is that it is presumably building up a national stockpile of these valuable materials just in case China decides to play more games. Since the technology for separating these oxides is quite complex, it will be difficult for producers outside of China to match Chinese economics. This certainly seems like a case for protecting a domestic industry, which is certainly allowed by the WTO.

 

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3 Responses to Rare earths revisited: Monopoly broken but security issues remain

  1. Kunal Khanna says:

    I also share some of your interest in rare earths – interesting developments in the market.

    You might find this article to be interesting (especially the video!)

    http://www.bbc.com/future/story/20150402-the-worst-place-on-earth

    • Peter, Heinz, Julius Spitz says:

      Thanks for your very informative comment and video. It comes as no surprise that such an environmental disaster was created and has probably existed for a long time. I suppose that China will start to clean up this mess as they have faced their coal-based atmospheric pollution, but itn will take a long time. Meanwhile, the world needs these products.

      • Kunal Khanna says:

        Very true. And because of how badly the world needs these products, I would love to see a concerted effort to help the Chinese control this type of pollution. They may create it, but we all rely on it and so we are still just as responsible.

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