Archive for the ‘Rare Earths’ Category

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The “Green” Treason

January 28, 2011

More on REEs.  Mr Wilson has it mostly right.  Reopening of Mountain Pass is on a “fast track” (See http://www.google.com/finance?client=ig&q=NYSE:MCP) and could be in production in less time than is presented in his piece.  Nevertheless, well intentioned but misdirected regulatory oversight could hamstring the mine/mill restart.  Any true push towards “clean energy” requires increasing uses of REEs and why should the US be held hostage to non-domestic supplies.

By Bill Wilson –

It’s the same old story: The U.S. has abundant natural resources, but refuses to extract and produce them, as usual, because of environmental restrictions and regulatory costs. In the meantime, we are exporting our energy security, job security, and now, national security to China and other emerging markets.
Since 2002, the U.S. has not mined any rare earth elements (REEs) — today used in U.S. smart bombs, silent helicopter blades, night vision, missiles, and tank guns, as well as computers, cell phones, DVD players, and other civilian technologies.
These metals are not even that rare. The nation as a whole has about 13 million metric tons in reserves according to the U.S. Geological Survey. We could make them ourselves. But we don’t.
Leaving that aside for a moment, a modern military, and many common conveniences we today take for granted, would not be possible without these metals. They are essential.
Which is why China has rapidly developed its rare earth element mining sector, with over 55 million metric tons in reserves and 130,000 metric tons of annual production. It now controls over 97 percent of REE mining and refinement in the entire world. China is largely able to do so because it holds about 36 percent of global reserves, has lower labor costs, and because it largely ignores the environmental impact of the REEs. Finally, it lacks competition since the U.S. dropped out of the market.
With the rise of China’s REE near-monopoly, concerns have emerged that the communist dictatorship has too much control over these metals that have become critical to defense and other high technology needs.
So, how could China, an adversary, gain so much control over such a strategically critical industry? Call it the green treason.
The problem is that nearly all of the nation’s production of REEs was done by a single company, Molycorp, at a single mine in California, Mountain Pass. From 1965 to 1985, Molycorp was the world’s leader in this industry, but because of a series of main wastewater pipeline spills from the mine, state and federal environmental regulators all but shut it down.
As reported by the Washington Independent, “Mining at Mountain Pass stopped soon after the spills came to light. Industry sources say Union Oil of California, which bought Molycorp in 1977, couldn’t afford to comply with environmental rules and felt that it couldn’t compete with China.” In other words, the environmental regulatory costs made it cost-prohibitive to produce the metals at a competitive price versus the Chinese.
But, rather than help the industry out with the regulatory problems, the government acted punitively against Molycorp. The regulators were indifferent if domestic production was completely turned off. It made sure production of REEs in the U.S. was severely hindered, even though shortages would disrupt the defense supply chain.
Just like that, a few faceless bureaucrats shut down an entire domestic industry — essential to national security — just as the Chinese overseas competitor was emerging. And it was all in the name of radical environmentalism.
Fears of Chinese manipulation in the market have subsequently been confirmed in July when China once again reduced its export quotas for these metals. Since 2005, it has reduced these quotas from over 65,000 metric tons to just over 30,000, according to the Department of Energy. This has caused prices of the metals to skyrocket.
Already, the scarcity of the REEs is having an impact on U.S. defense capabilities. According to a Governmental Accountability Office (GAO) summary, “A 2009 National Defense Stockpile configuration report identified lanthanum, cerium, europium, and gadolinium as having already caused some kind of weapon system production delay and recommended further study to determine the severity of the delays.” Which, unless the U.S. ramps up production, will only get worse as China tightens the entire world’s supply of REEs.
The GAO report notes the decline of the nation’s capabilities in this area: “The United States previously performed all stages of the rare earth material supply chain, but now most rare earth materials processing is performed in China, giving it a dominant position that could affect worldwide supply and prices.” The Department of Defense is undergoing several other evaluations to determine its dependency on these metals, but we already know that it is high.
So, what can be done to ramp up new domestic production? Right now, the U.S. imports about 10,000 metric tons of these metals, or 7.6 percent of global production, according to the USGS.  Unfortunately, the Mountain Pass mine has been gutted. According to the GAO, it “currently lacks the manufacturing assets and facilities to process the rare earth ore into finished components, such as permanent magnets.” It also lacks “substantial amounts of heavy rare earth elements” used in industry and defense. Nonetheless, Molycorp intends to begin mining again this year, and in July offered a successful $393.75 million IPO to rebuild its capabilities.
According to Dr. Madan Singh, director of the Department of Mines and Mineral Resources (DMMR) in Arizona, it could take up to two years to get the mine back online.
But to get the heavy rare earths, we’ll also need to mine in Idaho, Montana, Colorado, Missouri, Utah, and Wyoming. Again, the GAO report is not comforting: “Once a company has secured the necessary capital to start a mine, government and industry officials said it can take from 7 to 15 years to bring a property fully online, largely due to the time it takes to comply with multiple state and federal regulations [emphasis added].”
So, barring regulatory waivers being granted to companies to begin extraction immediately, it won’t be until 2020 at least before the nation’s REE capabilities can be fully reconstituted. In the meantime, it is likely that China will continue to reduce its export quotas, ratchet up prices, and hoard the REEs for its own defense stockpiles.
It’s bad enough that environmental radicalism has made the nation more dependent on foreign sources of fuel, and has exported hundreds of thousands of jobs. Now, it is harming our security as a nation.
It is up to Congress to urgently enact legislation that will cut through the red tape and help this domestic industry get its feet back on the ground. We have to make sure we’re not dependent on a hostile nation like China or a single mine in California in order to maintain first-rate defense capabilities. And our security must not be held hostage to onerous environmental regulations. This green treason must be stopped.
Bill Wilson is the President of Americans for Limited Government.

Read more at NetRightDaily.com: http://netrightdaily.com/2011/01/the-green-treason/#ixzz1CLMlLgto

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U.S. Rare Earth Mine Resumes Active Mining

December 28, 2010

By Michael Kan, IDG News

A major U.S. mine for rare earth metals has gone back into operation, adding a much needed source to offset China’s control of the unique group of materials necessary to build tech gadgets like smart phones and laptops.

Colorado-based Molycorp (www.google.com/finance?client=ig&q=NYSE:MCP)  resumed active mining of the rare earth metal facility at Mountain Pass, California last week. The site had been shutdown in 2002 amid environmental concerns and the low costs for rare earth metals provided by mining operations based in China.
Rare earths encompass a group of 17 metals that are vital to the miniaturizing of electronic components such as magnets and capacitors. China mines more than 90 percent of the world’s current demand for them, according to analysts. But the country has been tightening control of its supplies, causing concerns among countries like the U.S. and Japan, which import rare earth metals.

Those fears came into the spotlight when in September media outlets reported that China had stopped exporting rare earths to Japan following a diplomatic spat. While Chinese officials have said the country will not use the resources as a bargaining chip, the government announced earlier this month it was raising export tariffs on certain rare earths.

Molycorp, the owner of the Mountain Pass mine, is seeking to free the U.S. from it’s dependence on China for rare earth metals. By the end of 2012, the company is aiming to produce 20,000 tons of rare earths, likely enough to start meeting U.S. demand. Molycorp also plans on breaking ground to the construction of a new rare earths manufacturing facility at the site next month.

China, on the other hand, produced about 124,000 tons of rare earths in 2009, according to analysts reports. The country is also the biggest manufacturer of products that use the metals.

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China says half of rare earth exports go to Japan, admits export quota cuts

November 22, 2010

By Alex He | November 16, 2010 6:13 PM EST

In the first nine months of this year, China exported 16,000 tonnes, or 49.8 percent, of its total rare earth to Japan, representing 167 percent rise year on year, the Ministry of Commerce (MOC) spokesman Yao Jian said on Tuesday.

The country’s rare earth export to U.S. amounted to 6.2 thousand tonnes, or 19 percent, during the same period. It represents 5.5 percent increase year on year.

From January to September, China exported 32,200 tonnes of rare earth at an average price of 14.8 thousand dollars per tonne.

Despite producing 80-90 percent of the world’s rare earths, China has only around 30 percent of the world’s proven reserves, Yao said.

China does not deny reducing the quota for rare earth metal exports. Yao said China cut its 2010 rare earth export quota 39 percent year on year while rare earth development and production capacities were reduced by 25 percent and 23 percent, respectively.

Yao, however, insists China is doing so “concerning the development, production and export of rare earth out of concern for the environment” and such reductions are in line with World Trade Organization (WTO) rules.

China, which has had a near-monopoly on the production of rare earth metals for years, has drawn criticism from Japan, the U.S. and the European countries. They said China’s restrictions on rare earth exports did violate the WTO rules.

 

According to The Economist, “Slashing their exports of rare-earth metals…is all about moving Chinese manufacturers up the supply chain, so they can sell valuable finished goods to the world rather than lowly raw materials.”

Rare earth metals are crucial to many of the world’s most advanced technologies, such as cellular phones, high performance batteries, flat screen televisions, green energy technology, and are critical to the future of hybrid and electric cars, high-tech military applications and superconductors and fiber-optic communication systems.

However, the mining, refining and recycling of rare earth are highly-polluting processes.

China hopes other rare earth-rich nations will develop their own resources while adding that China is ready to cooperate with other nations to mine and process rare earth in an environmentally-friendly way, Yao concluded.

Late last month, the first U.S. exchange-traded fund (ETF) investing in companies that produce rare-earth elements and other strategic metals began trading this morning on the NYSE Arca Stock Exchange.  The ETF tracks an index comprising of 24 mining companies including Iluka Resources Ltd., the world’s biggest zircon producer, China Rare Earth Holdings Ltd., a Hong Kong-based manufacturer and wholesaler of rare-earth products; and Titanium Metals Corp.

Writing in the 24/7 Wall St. blog, John Ogg comments that  rare earth elements are not exactly “rare” by definition.  “What is rare about them is that the quantities of locations capable of being mined at cost-effective commercialization are rare,” Ogg said.