Why Nobody But China Produces Rare Earth Metals

The discovery of massive rare earth deposits on the Pacific floor could, claims Japan’s Asahi Shimbun, “end China’s virtual monopoly on the metals“. From The Wall Street Journal:

The Japanese team found deep-sea mud containing high concentrations of rare-earth elements and yttrium at numerous sites throughout the southeastern and north-central parts of the Pacific Ocean, the journal said in its online edition over the weekend.

“We estimate that an area of just one square kilometer [0.39 square mile], surrounding one of the sampling sites, could provide one-fifth of the current annual world consumption of these elements,” team leader Yasuhiro Kato, an associate professor of earth sciences at Tokyo University, said in the report ….

The minerals are recoverable from the mud by acid leaching, making deep-sea mud a highly promising and potentially huge resource for these elements.

But Business Insider’s Joe Weisenthal argued last week that China’s dominance of the global supply rests on its willingness to undertake the necessary but environmentally damaging processing, rather than on the geographical distribution of ore reserves.

People have this misconception about rare earth metals that only China has them, and that its China’s lockdown on them that makes them such a good investment/bet going forward, especially since so many modern technologies rely on them.

But part of that is wrong. Lots of places around the world have rare earth metals. It’s just that only China produces them, because it’s generally disregarded the safety/environmental aspects of them.

Weisenthal points out a New York Times article on a rare earth processing plant under construction in Malaysia, which may become the first such facility completed outside China in almost thirty years. Leaked memos reveal serious potential problems, illustrating why other countries have chosen to leave the processing to China.

The problems they detail include structural cracks, air pockets and leaks in many of the concrete shells for 70 containment tanks, some of which are larger than double-decker buses. Ore mined deep in the Australian desert and shipped to Malaysia would be mixed with powerful acids to make a slightly radioactive slurry that would be pumped through the tanks, with operating temperatures of about 200 degrees Fahrenheit.

The engineers also say that almost all of the steel piping ordered for the plant is made from standard steel, which they describe as not suited for the corrosive, abrasive slurry. Rare earth refineries in other countries make heavy use of costlier stainless steel or steel piping with ceramic or rubber liners.

The engineers also say that the concrete tanks were built using conventional concrete, not the much costlier polymer concrete mixed with plastic that is widely used in refineries in the West to reduce the chance of cracks ….

“These issues have the potential to cause the plants critical failure in operation,” Peter Wan, the general manager of Cradotex, said in a June 20 memo. “More critically the toxic, corrosive and radioactive nature of the materials being leached in these tanks, should they leak, will most definitely create a contamination issue.”

Claims regarding the size of the Pacific deposits have, in any case, come under scrutiny. From Technology Metals Research:

What the authors do NOT estimate, is a size of the total mineral resource, and wisely so. While they mention that the thick distributions of mud at numerous sites might mean that the REEs [Rare Earth Elements] on the sea floor “could exceed the world’s current land reserves of [110 million tonnes]“, they acknowledge the considerable challenges and significant variability present on the seafloor, and thus state that “resource estimates for large regions cannot be made until more detailed data are available for areas lacking cores.”

…[If] the scientists themselves are not making the claim that there are “an estimated 100 billion tonnes of rare-earth deposits”, as reported by Reuters, Nikkei, and the BBC – just who IS making this claim? Who has inserted these comments into this story, and fed them to the mainstream media, and why might they have done that? Can we find clues in the current pricing turmoil, worries about supply from China, and the increasing politicization of the rare-earths story?

Meanwhile, a WTO decision against China has cleared the way for Western challenges to China’s policy on rare earth exports. From The Wall Street Journal:

The World Trade Organization is set Tuesday to condemn China for limiting its exports of major raw materials, rebuffing Beijing’s arguments that curbs are necessary to protect the environment, according to trade diplomats and lawyers.

The victory will pave the way for a case on rare earths, said U.S. and EU trade officials ….

Rare-earth minerals, which are essential to many industrial applications, have become a special problem. China has some 30% of the world’s supply but is responsible for more than nine-tenths of the world’s exports.

Analysts such as Mr. Ericsson said that the rest of the world will soon catch up, as companies in the West reopen old mines.

That will take a decade or so and will eventually secure steady supplies, he said.

See also: Rare Earths are Paper Tigers, via CDT.