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Rare Earths Processing Could Get A Boost In The US

by Jesse Emspak – International Business Times [1] – Published: September 27, 2010

Cuts to rare earth exports from China could spur development of technology and infrastructure that has been absent from the U.S. for years, industry experts say.

Over the last week rumors of a Chinese ban on exports of rare earths – a class of elements used in many high technology products – to Japan has fanned concerns about the source of supplies. There are three places in the world where rare earths are available: China, Australia and the United States.

Rare earths are metals such as neodymium, lanthanum, cerium, and europium. Neodymium is used in the strong magnets that are part of computer hard drives, while lanthanum is used as a catalyst in refining crude oil. Europium was first used extensively for red phosphors in television screens. Cerium is used in some types of LCD glass.

Mining the rare earths is not the problem, says Gareth Hatch, co-founder of Technology Metals Research, a consulting firm. Processing the ore into useable metal is mostly done in China, with a smaller part of the market in Japan and Germany.

In the U.S., much of the expertise in extracting the metals from the ores has been lost as mines shut down and manufacturing of electronics was moved overseas. Even if all of the ores were mined in the U.S., Hatch says, they would have to be sent to China to be converted into metals. “There just isn’t any of the infrastructure or technology here anymore,” he says.

That trend could reverse in mid-2012, when MolyCorp opens up its processing facility in Mountain Pass, Calif. The facility will be near the site of a rare earths mine that was closed in 2002. Jim Sims, director of public affairs for the Greenwood Village, Colo.-based company, says by the end of 2012 MolyCorp will be able to process 20,000 tons of rare earths per year. MolyCorp plans to spend $511 million on the project.

In addition to processing the ore, MolyCorp also plans to make the rare earth magnets – primarily neodymium-iron-boron alloy – that go into hard drives and other electronics. Sims says the idea is to have the entire production process in the U.S. He adds that the company is applying new technologies to the processing in order to cut costs enough to be competitive with the Chinese processors as well as reduce the environmental impact.

Most high tech companies in the U.S. have already outsourced production to China, so any rare earths used in electronics such as iPhones and liquid crystal displays don’t fall under export restrictions. But the Chinese government has been trying to consolidate and modernize its mining industry, in part due to environmental concerns, says Hatch. That will cut into the amount produced every year.

Even if the Chinese government wanted to sell all of the country’s rare earth metals as fast as possible, the supply chain is still vulnerable. Hatch notes natural disasters can damage mines and extraction plants. “When there was an earthquake in Chile, if it had happened a hundred miles north, that could have meant a lithium shortage,” he said, referring to the 8.8 magnitude quake in February. Chile produces much of the lithium used in electronics, primarily batteries. “It just makes business sense to get these things from somewhere else.”

Processing rare earths into the magnets requires several steps. First the ore has to be treated with strong acids and bases and the oxides of the metals in it extracted. Those oxides have to be separated into pure metal, which must then be made into the relevant alloys.

Jeffery Green, president of J.A. Green & Company, a consulting and lobbying firm, says the move towards mining and processing more rare earths in the U.S. can’t come too soon. He says a strategy of “manufacturing first” will help insure that there is less chance of supplies of vital components being disrupted.

Green adds that the Chinese government has already been applying pressure to companies that want to buy the oxides of rare earths that are processed into metals. “One company was told, ‘if you want the oxides you have to co-locate in China,'” he said. “The electric vehicle makers were told that if they want these materials we demand the technology to make them in China.”

There is already a shortage of the metal itself, Green says. He puts the total demand for rare earths at about 180,000 tons per year, while the total production is 140,000 tons per year. Decreases in the Chinese export quotas have already pushed prices up anywhere from three- to eight-fold, depending on the metal. For example, samarium used in permanent magnets, went from $21 per kilogram earlier in the summer to $71 in September.

The fact that shares of MolyCorp, which were issued at just under $13 in a July initial public offering, have risen to $29 by Monday afternoon shows that there’s a lot of interest from investors in control of the supply chain.

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#1 Comment By TERRY MILLER On September 27, 2010 @ 9:20 pm

whaada bout great western minerals they proccess rare earth’s now .
they don’t have goldman saches behind them but i like that.

#2 Comment By Red9 On September 27, 2010 @ 9:58 pm

I keep reading about Molycorp as a potential leader in the REE sector but what the west requires are not the light rare earths mined from the Mountain Pass site. Light rare earths are not rare. Heavy rare earths are.

Great Western Minerals group has one of the worlds highest concentration of heavy rare earths coming on line in the next year or possibly sooner from their Steemkampstral mine in SA. They also have processing plants in the US and the United Kingdom, as well as a contract to produce alloy’s with the US gov’t.

When will we see GWG (tsx symbol) begin to get the attention it deserves? For any of you who may not be aware, Molycorp tried to buy them out in ’09 unsuccessfully.

I believe investors are being led down another Goldman Sachs lane…

#3 Comment By Gordon Clarke On September 28, 2010 @ 12:44 am

Jack;

You already know what I think. VIVA GWMG!

#4 Comment By Ernie On September 28, 2010 @ 3:53 am

Very……… Informative and Interesting Blog………Thanks.. for Sharing….. :-)

#5 Comment By my69z On September 28, 2010 @ 7:18 am

UCU.V …… [2] ,,,and it’s the U.S. “heavies” deposit that Mr. Lifton has said he would purchase and build a supply chain around.

Some HREE results at UCU have been as high as 95%.

But along the GWG theme,,,,,there’s also RUU.V

Glta!

#6 Comment By my69z On September 28, 2010 @ 9:13 am

One other thought…..GWG is authorized to R/S,,,i THINK it’s for a 1 for 3….just a fyi.

I wonder if Molycorp will buy out someone being their pps is on a serious rip…..GWG does come to mind as a second attemp,,,,but i’ve always wondered about UCU also…especially being they are working on proving to be western hemisphere’s best Heavy REE play.

Oh well…..glta !

#7 Comment By my69z On September 28, 2010 @ 10:36 am

” “The de-facto ban on rare-earths export that China has imposed could have a very big impact on Japan’s economy,” Economic and Fiscal Policy Minister Banri Kaieda told a news conference. ”

And who depends on China for their REE needs ??…..yep,,,USA.

Wonder what’ll happen down the road when the U.S. refuses to re-position aircraft carriers ???..Japan’s “stockpile” can’t sustain them AND the U.S…..even China is fearful of runin out of heavy ree’s due to their internal consumption.

[3]

#8 Comment By Lindsey V. Maness, Jr. On September 28, 2010 @ 8:26 pm

As a geologist and CEO of a resources exploration firm, with a special interest in strategic metals (i.e., REE and semiconductor elements), I have inventoried and mapped both HREE and LREE, worldwide. Right here in Colorado, alone, I know of over 30 REE occurrences, some quite significant. HREE and LREE do usually occur together: the Mountain Pass mine is but one example of many. If you want to explore for and produce REE, please contact me.

#9 Comment By my69z On September 29, 2010 @ 6:59 am

Lindsey,,,,,for me…if anything in Colorado,,,or the others mentioned in the GAO report,,,, can’t beat this about UCU.V ….” The mineralogy in the area is believed be the largest historically documented heavy rare earth elements (HREE) deposit in the United States. “…..then for me,,,,,i wouldn’t be interested.

And these guys are movin to pre-production studies shortly.

Glta !