Tuesday, October 20, 2015

Shortage of rare earth minerals alarms high-tech companies worldwide

Rare earth minerals in powder form.
Just as big demands for rare earth elements (REES) soared by leaps and bounds over the years, the People’s Republic of China (PROC), which controls about 90 percent of the world’s supply, has slowly tightened its grip on the flow of supply into the open markets. Consequently, this put many high-tech companies worldwide wondering as to whether they could still meet their current production quotas or not?

What was the motive behind China’s move? Based on reports, China has stopped further explorations of these metals when it found out that some of its local miners were engaged in illegal mining activities. Consequently, the flow of raw materials to the open markets was affected, thus hindering many hi-tech companies to meet their production targets.

And no matter how optimistic they may seem, they felt that import demands may be hampered. Blame it on China’s self-imposed totalitarian rule to restrict the flow of rare earth metals to the international markets, which some mineral pundits observed, as another way to manipulate the prices of REEs to its own advantage.

Largely used as integral components of digital gadgets and electronics devices known to man, the chronic shortage has impacted on the ability of high-tech companies to keep up with the orders from international buyers. Already, one of the giant companies that is reeling from this rare earth’s shortage is General Electric, which uses terbium and europium for the manufacture of fluorescent bulbs. These bulbs, which are much cheaper and economical for household use, have been preferred by millions of consumers around the world.

While the United States accounts for most of the high tech companies today, it only holds about 13 percent of rare earth mineral deposits known to man. China, in fact, controls more than 90 percent of these rare earth production worldwide. And China is, now taking advantage of the situation by limiting the supply of its rare earth exports.

Ironically, the United States needs more rare earth elements that it can ever dream of. Unfortunately, it is largely dependent on China for these critical minerals, posing a serious threat to the American economy, says Ann Norman, et al, a senior research fellow, in her report “Critical Minerals: Rare Earths and the U.S. Economy,” published by the Washington, D.C.-based National Center for Policy Analysis (NCAP).

Molycorp's open-pit mining in California.
With few suppliers, disruptions in the Chinese rare earth market lead to price fluctuations, with ripple effects across rare earth-dependent industries. Notably, the United States has a considerable rare earths supply; what it lacks is an efficient permitting process to attract investments and promote extraction, Norman said.

In 2013 alone, rare earths shipments (the net selling value of products shipped from a mining or manufacturing business) totaled $795 million. However, the value of REs to the American economy is quite significant, due to their widespread use in many common products, she said.

While hi-tech companies are gasping for breath, the NCAP claimed that world demand for rare earths was estimated to reach 136,100 tons per year and this figure is expected to rise to 160,000 tons by 2016. Significantly, rare earth minerals are vital to the North American economy in general as end-market products and technologies, including oil refining processes and wind power, use rare earth elements to generate over $259 billion in revenues.

“These industries support 433,500 jobs and $27.2 billion in payroll. In total, rare earths support more than $298 billion in revenue from downstream economic activity, generating 535,000 American jobs and more than $33 billion in payrolls,” the NCAP research said.

With no assurance from where to get enough raw materials to keep their business running, many high-tech companies are forced to look at other alternative sources if only to keep up with their production quotas worldwide.

But no matter how optimistic they may seem, a paradise is not always bedecked with a bed of roses. A major question that played up in their minds was how come this problem cropped up only now when business has started to perk up?

Industry analysts have expressed worry that the impending instability is expected to create a situation that could possibly hurt the labor industry. When high-tech companies are unable to cope with market demands largely due to lack of raw materials, it is most likely that they will be left without any choice but to trim down operations, and may be forced to issue pink slips to thousands  of current workers who largely depend on hi-tech jobs as their only means of livelihood. But industry analysts have thought otherwise. 

They believed that the Chinese government's move to limit exports of REEs stemmed from its commitment to manipulate prices in the open markets. It is an accepted dictum that when the demand is high, the supply is low and vice versa. But what makes these minerals so valuable so that the world is badly in need of them?

Kathryn Free wrote at www.scienceline.org: “These metals are valuable because they each have distinctive — and rare — qualities. Neodymium and samarium, for example, are strong magnets, making them crucial for computer hard drives and headphones. Cerium is a powerful catalyst used as an additive to diesel fuel. Europium and terbium are needed for fluorescent light bulbs.”

As demands for rare earths rose, advanced countries have scrambled to get their share of rare earths, she said. The situation was aggravated when China reduced its rare earth exports by 70 percent in July 2010 onwards, a phenomenon that rattled some countries, she added.

 “Market instability is detrimental to manufacturers that depend upon a reliable supply of materials and can deter the introduction of new technologies,” says a study made by a group of researchers from the Massachusetts Institute of Technology (MIT).

According to the study, REEs are important because they provide critical functionality in a wide variety of applications. In fact, 17 of these rare earth elements are used in relatively large amounts in key technologies being developed to provide sustainable mobility and energy supply. Unfortunately, the availability of REEs appears to be at risk based on a number of factors.

The study further stated: “Another contributor to supply risk for REEs is the fact that they are co-mined; individual REEs are not mined separately. REEs are found together in geological deposits, rendering mining of individual elements economically inefficient.”

In today’s digital revolution, the importance of rare earth minerals cannot be discounted. Notably, they have become an indispensable part of the world’s technological advancement. As competition heats up among developed countries, the race to be on top of the technological game is of utmost important.

But will high-tech companies be able to keep up their technological race? That remains to be seen. In fact, the sensitivity of this issue has awaken the senses of some highly experienced technocrats who have expressed determination to further explore the possibility of processing rather than extracting REEs  from beneath the earth’s crust.

In March 2015, Dr. David Dreisinger, vice president and director of metallurgy for Search Minerals Inc., told InvestorIntel.com about his company’s plan to develop rare earth assets in Labrador, which would include neodymium, europium, terbium, dysprosium and yttrium.

“About 20 percent of our rare earths in our deposit are heavies, including the all-important dysprosium, which is very much in vogue in terms of the magnetic materials,” Dr. Dreisinger said.

As to the pending patent, he admitted: “We went through initial metallurgical development back in 2012 and did the classical upgrading to make a concentrate chemical treatment to extract the rare earths and made a rare earth — a mixed rare earth oxide as our final product and then realized that was probably too expensive to do all those different steps with our material.”

According to him, the direct extraction method, instead of crushing and grinding to very fine size our mineral, we basically just crush the material to a fairly coarse size, about 3 millimeters, and then we apply modest amounts of acid and heat that acid ore mixture to about 200 degrees Celsius, about the same temperature as cooking cookies in the oven at home.

While Search Minerals Inc. is into direct extraction method to produce more REEs underground, some companies have thought of venturing into recycling as a means to beef up production of raw materials.

For example, Molycorp, based in Greenwood Village, Colorado, and the world’s leading manufacturer of engineered rare earth products using advanced downstream facilities, has proudly stated in its website that this process allows the company to produce 13 different rare earth metals up to the purity level of 99.9999 percent. Unfortunately, Molycorp shut down its operation in California recently.

Why recycling in the first place? The company cited estimates that only one percent of all rare earth minerals are recycled today.  “That accounts for very little of what could be useful. In fact, most of the rare earths used in applications, such as fluorescent lighting and computer hard drives, can be recovered and reused.”

Molycorp has came up with the idea because it is convinced that the application of recycling method would cut the dependence of high-tech companies on foreign supplies of rare earth minerals, which are currently abundant in some parts of Asia.

The company said: “While recycling is a highly promising source of future material, the logistics and processes are complicated and will require greater consumer awareness and participation as well as extensive research and development.”

In fact, the company has challenged consumers  to recycle old electronics devices and fluorescent light bulbs. It even cited a 2009 report from the Environmental Protection Agency (EPA) which revealed that only 25 percent of consumer electronics were collected for recycling (38 percent of computers, 18 percent of televisions, and 8 percent of mobile phones).

The static depletion index of (reserves/present production) of rare earth is approximately 870 years. While copper, a key industrial metal, has a static depletion index of 34, the known reserves for rare earth are not expected to be constraining in the next 25 years, a study noted.(RG Altarejos)

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