Growing demand, Strategic importance and scarcity of Rare Earth Elements is driving search for new mitigation strategies

REEs are a series of chemical elements found in the Earth’s crust that are essential components of many technologies, including electronics, computer and communication systems, transportation, health care, and national defense. Rare Earths Elements (REE) are incorporated into many sophisticated technologies with both commercial and defense applications including smartphones and flatscreen televisions to hybrid cars, wind-turbine power systems to communications equipment. These are referred to as “rare” because although relatively abundant in total quantity, they appear in low concentrations in the earth’s crust and extraction and processing is both difficult and costly.

 

The top rare earth producing countries are China (105,000 tons), Australia (10,000 tons), US(4,100 tons), Russia(2,500 tons), Thailand(1,100 tons) and Malaysia (200 tons). Some estimates are that China now produces about 90- 95% of the world’s rare earth oxides and is the majority producer of the world’s two strongest magnets, samarium cobalt (SmCo) and neodymium iron boron (NeFeB) permanent, rare earth magnet.

 

The 70% of the world’s light rare earths coming from a single mining operation at the Bayan Obo deposit in Inner Mongolia.China imposes several different types of unfair export restraints on the materials at issue in today’s consultations request, including export duties, export quotas, export pricing requirements as well as related export procedures and requirements.

 

“Because China is a top global producer for these key inputs, its harmful policies artificially increase prices for the inputs outside of China while lowering prices in China; This price dynamic creates significant advantages for China’s producers when competing against U.S. producers – both in China’s market and in other markets around the world,” found Office of the U.S. Trade Representative. The improper export restraints also contribute to creating substantial pressure on U.S. and other non-Chinese downstream producers to move their operations, jobs, and technologies to China.

 

Rare-earth minerals are important strategic yet non-renewable resources, and efforts are needed to ramp up scientific and technological innovation for there to be increased added value in the sector, Chinese President Xi Jinping said while visiting a major rare-earth company in East China’s Jiangxi Province, the Xinhua News Agency reported in May 2019.

 

There needs to be a push to continuously improve extraction and utilization techniques, extend the industry chain, raise the added value, and enhance environmental protection of relevant projects to achieve green, sustainable development, Xi said during his visit to JL MAG Rare-Earth Co in Ganzhou. It was the latest hint that the world’s No.1 producer of rare-earth elements is giving the minerals a place of prominence amid escalating trade tensions with the US.

 

It has even used this power as an economic weapon, reportedly cutting off rare earth supplies to Japan in September 2010 over a long-standing territorial dispute. After several years of investigation, the WTO concluded in summer 2014 that China was indeed violating its free trade commitments. In response to the ruling, China announced in early 2015 that it would lift the export quotas.

 

The United States  banned imports of a range of rare earth materials from Russia, China, Iran, and North Korea that can be used in military applications, the US Defense Department said in a notice in April 2019. “[The Defense Department] prohibits acquisition of samarium-cobalt magnets, neodymium-iron-boron magnets, tungsten metal powder, and tungsten heavy alloy or any finished or semi-finished component containing tungsten heavy alloy melted or produced in North Korea, China, Russia, and Iran, because these materials play an essential role in national defense,” the notice stated.

 

The United States Department of Defense is in talks with Australia to host a facility that would process rare earth minerals, part of an effort to reduce reliance on China for the specialised materials used in military equipment, a senior American official said. The push comes as China threatens to curb exports to the US of rare earth materials, a group of 17 minerals used in the production of fighter jets, tanks and hi-tech consumer electronics.

 

“We’re concerned about any fragility in the supply chain and especially where an adversary controls the supply,” Ellen Lord, the Pentagon’s Under Secretary of Defense for Acquisition and Sustainment, told reporters at a Washington event in Aug 2019. Lord said the Pentagon was looking at several options to partner on rare earth processing facilities, adding “one of the highest potential avenues is to work with Australia”. The Pentagon update came after the US said earlier this year that it would look to Australia and Canada to develop rare earth reserves around the world to reduce the global reliance on China. It has also held talks with rare earth projects across Africa. There is only one operational rare earths mine in the US, though the country has no processing facilities. California’s Mountain Pass mine is building a processor and hopes to have it online by next year.

 

Australia’s Lynas Corp is the world’s largest rare earths miner and processor outside of China and plans to have an initial processing plant running within the next four years. It is also planning to develop a rare earth separation facility in Texas following regulatory issues at its processing plant in Malaysia. Rare earth developers in Australia are edging closer to building plants. The country contains only 2.8 percent of the world’s rare earth reserves, but accounts for more than half of the new projects in the global pipeline.