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On a plaque in the lobby of the headquarters of Baotou Steel Rare Earth Hi-Tech, the largest producer of rare earth metals in the world, is a quote by Deng Xiaoping, China's legendary reformer. The quote - The Middle East has oil, but China has rare earth - is symbolic of China's growing dominance in the global market for rare earth metals, of which it controls 97%.
There are 17 rare earths that belong to the lanthanide family of elements in the periodic table, beginning with lanthanum (atomic no. 57) and ending with lutetium (atomic no. 71). Scandium (atomic no. 21) and yttrium (atomic no. 39) are also grouped with the lanthanide family because of their similar properties. There are 2 categories of rare earth elements - light rare earths and heavy rare earths - based on their atomic weights and location in the periodic table.
Although heavy rare earths are not as abundant as light rare earths, the term rare earth is actually a misnomer, given that they can be found in almost all massive rock formations. Because the concentration of rare earth elements in the Earth's crust ranges from 10-500 ppm by weight, the real challenge is finding them in high enough concentrations to be economically mined and processed.
Although the scarcest rare earth metal is more abundantly available than precious metals like gold, platinum and palladium, a few are actually quite rare. Light rare earths (like cerium) are plentiful, but heavy rare earths (like europium) are becoming harder to find.
Refer to this image for 2007 and 2008 prices of rare earth oxides and metals.
Rare earth metals are important because of their specificity, versatility and unique properties (catalytic, chemical, electrical, metallurgical, nuclear, magnetic and optical). The range of applications in which they are currently used is extraordinarily wide, from the ordinary (automotive catalysts, petroleum cracking catalysts, lighter flints, glass and ceramic pigments, polishing compounds) to the highly specialized (miniature nuclear batteries, superconductors, lasers repeaters and powerful miniature magnets). From relative obscurity, they are now important economically, environmentally and technologically. Some prominent applications are given below.
As compared to mining gold, it is more complicated and costlier to extract rare earth metals from their ores. Most of the market value of rare earth metals is added in the refining process and, before they can even be used in an application, rare earths need to be put through the following processing stages.
Unlike normal mining processes, rare earth mining produces radioactive waste. Dealing with this waste in the U.S. and Canada requires expensive mitigation efforts, thus putting North American producers at a disadvantage as compared to less thoroughly monitored operations in China. As a result, even though prices have spiked in recent years, rare earth mining is still orders of magnitude less lucrative than mining for copper or iron.
|Country||Reserves (t REO)||2006 Mine Production (t REO)||2007 Mine Production (t REO)||2009 Mine Production (t REO)|
|World Total (rounded)||99,000,000||123,000||124,000||124,000|
Source: Mineral Commodities Summary 2010, U.S. Geological Survey (t REO = metric tonnes of rare earth oxide)
Until the 1980s, the Mountain Pass mine in Southern California was the world's leading producer of rare earth metals. A separation plant was closed in 1998 after regulatory scrutiny of a wastewater line and the mine itself shuttered operations in 2002 after Chinese producers undercut its prices. Today, the mine manages a limited production of rare earth oxides from ore mined years ago, although these oxides must be shipped to processing plants in Asia which convert them into rare earth metals, alloys and finished products. However, even at full production, the Mountain Pass mine lacks significant deposits of heavy rare earths, which are increasingly in demand.
Some prospects for developing heavy rare earth production in the U.S. include the Lemhi Pass in Northern Idaho, Diamond Creek in Northern Idaho and Bokan Mountain in Southern Alaska. Historical estimates by the U.S. Bureau of Mines suggest that Bokan Mountain may contain 170 million kg of of rare earths, roughly half of which are heavy rare earths, and that Lemhi Pass has a one-to-one ratio of rare earths to thorium. Although other deposits exist in the U.S. and elsewhere, it could take over a decade just to get production online.
In the 1980s and 1990s, China came to dominate the global market for rare earth metals by cutting prices. The country now controls 97% of the world's supply of rare earths, partly because of its willingness to tolerate low cost, high polluting mining methods. The more common light rare earths come from the Bayan Obo mine in Inner Mongolia, which accounts for 40% of global production. The much rarer heavy earths come almost exclusively from clay pits in Southern China, many of which are unlicensed and unregulated. Today, rare earth metals are mined in Inner Mongolia, Shangdong, Jiangxi, Guangdong, Hunan, Guangxi, Fujian, Sichuan and other regions throughout China.
China currently accounts for 99% of global production of terbium and dysprosium, and 95% of neodymium. The U.S. Magnet Materials Association predicts that China's own demand for some rare earths will outstrip demand in 2-5 years and pressure to develop few other known reserves will increase accordingly. At the same time, the country intends to combine the many small mines in Inner Mongolia into a handful of companies, creating powerful entities like Baotou Steel Rare Earth Hi-Tech, which describes itself as the dragon head of the industry.
Of late, China has taken a number of steps to cement its monopoly of the global rare earth market. First, in each of the last 3 years, the country has reduced the amount of local rare earth production that can be exported. The total export quota for 2010 is 30,258 tonnes, 40% less than the 50,145 tonnes for 2009. Second, China appears to be forcing manufacturers that use rare earths to move onshore by using export quotas to limit the availability of these materials outside the country. Last, but not least, the country has made moves to buy other rare earth resources around the world. When credit markets collapsed in 2008, government-owned mining companies stepped in to acquire 52% of Lynas Corporation and 25% of Arafura Resources, which plan to open mines in the next few years that would have a combined production equal to 25% of the global rare earth output.
Source: China Cuts Rare Earth Export Quota 72%, Bloomberg (Jul 2010)
All 3 rare earth producers in India, including Indian Rare Earth and Kerala Minerals & Metals, are government-owned.