MINING: Rare earths, hardrock production crucial to clean enery expansion -- panel (01/07/2010)

Source: Phil Taylor E&E Land News Reporter

The United States must revive production of rare earths and other hardrock minerals if it hopes to continue its transition to renewable energy and other low-carbon technologies, according to a panel of mining experts convening this week in Phoenix.

Industry leaders are warning of an impending shortage of rare earths and other minerals crucial to the manufacturing of wind turbines, hybrid-electric vehicles and energy-efficient light bulbs if the United States fails to boost domestic mining.

"You don't have these things without the material that comes out of the ground first," said Robert Noll, sales manager at Molycorp Minerals LLC, which plans to resume extraction of rare earths at its Mountain Pass mine in the California's Mojave Desert by 2011.

China currently produces more than 97 percent of the world's rare earth elements, including ones such as lanthanum, which is used to manufacture the nickel-metal hydride batteries in the Toyota Prius, and dysprosium, which provides lighter magnets for wind turbines.

It also holds a virtual monopoly on production of Europium, the chemical that produces red color in television monitors and LED used for energy-efficient light bulbs.

Recent reports that China is seeking to eliminate exports of its scarcer rare earths and curb exports of others has ignited fears of a worldwide shortage and shored up support for proposals like Mountain Pass.

"The supply chain for all of these minerals is very much at risk," Noll said during a presentation at the Business Summit of the West.

As the Obama administration pursues a goal of putting 1 million plug-in hybrid electric vehicles on U.S. roads by 2015, some warn that it risks trading a dependence on foreign oil for one on foreign minerals. That dependence would only intensify as other countries around the world increase production of low-emission technologies.

The 2,200-acre Molycorp mine would be the only rare earth mine in the country and could make the United States a global leader in production, Noll said.

At the same time, a revival of rare earth mining could generate thousands of new jobs, with Mountain Pass alone expected to create 900 new jobs at its site 60 miles southwest of Las Vegas.

Minerals for power, transmission

In addition to rare earths, panelists urged an expansion of conventional hardrock mining of minerals such as copper and uranium, both of which are found in relative abundance in the Southwest.

While uranium today sells for less than a third of its mid-2007 peak price, demand for the mineral is expected to surge as countries around the world build more nuclear power plants that emit virtually no greenhouse gases.

"We're 95 percent dependent on foreign sources of uranium," said Laura Skaer, executive director of the Northwest Mining Association. "If we're going to have a greenhouse gas-free baseload energy source going forward, it's got to be uranium."

Skaer criticized the Interior Department's decision last year to ban future mining claims on 1 million acres of land near the Grand Canyon, land she said contain 45 percent of the known uranium reserves in the country (Land Letter, July 23, 2009).

While Skaer insisted that the uranium deposits in the area could be mined in place without disturbing the landscape, critics say mining would risk contaminating the Grand Canyon watershed and should be off-limits to industry.

Rep. Raúl Grijalva (D-Ariz.), chairman of the House Subcommittee on National Parks, Forests and Public Lands, has introduced a bill that would make the Interior changes permanent.

But such policies would contradict the Obama administration's stated goal of investing in carbon-free energy such as nuclear power, said Skaer.

"You hear a lot of policy makers talk about energy policy, but not a lot about mineral policy," she said. "They are one in the same."

Copper production, for example, is vital in order to expand the nation's transmission system to connect remote wind and solar farms to power consumers, Skaer said.

Vince Matthews, director of the Colorado Geological Survey, said China's ravenous appetite for copper is causing demand and prices to skyrocket worldwide. Such demand, he said, bolsters a proposal before the the Forest Service to trade 2,400 acres of the Tonto National Forest to Resolution Copper to build a mine in exchange for more than 5,500 acres of the company's private holdings (Land Letter, Dec. 17, 2009).

Such a land deal "would be the economic equivalent of the Super Bowl in Arizona for the next 60 years," said Sydney Hay, president of the Arizona Mining Association. "That one project could erase the budget deficit for the state."

Reforming century-old mining laws

While recognizing the role of minerals in clean energy and low-carbon technologies, environmentalists say the United States must first reform hardrock mining laws that have remain unchanged since 1872 before embarking on a major expansion of domestic mines.

Abandoned mines in the United States have left a legacy of toxic pollution that has contaminated watersheds and led to massive fish kills. Of the 161,000 abandoned hardrock mine sites in 13 Western states, at least 33,000 of them are harming the environment with acid drainage and other contaminations, according to the Government Accountability Office.

Lawmakers, including Sen. Jeff Bingaman (D-N.M.) and Rep. Nick Rahall (D-W.Va.), are proposing changes to the General Mining Law that would charge royalties on mineral production similar to oil and gas royalties in order to raise revenues for mine cleanups. The bills may also give more authority to public land managers to reject mining proposals.

"We're looking to have a more modern policy that doesn't ban uranium mining but strikes a balance so that fish and wildlife habitats are better protected," said Jane Danowitz, spokeswoman for the Pew Campaign for Responsible Mining.

Cathy Carlson, an adviser for the Washington, D.C.-based group Earthworks, said staffers for Bingaman, who serves as chairman of the Energy and Natural Resources Committee, have said the senator hopes to pass a mining reform bill in April.

But Skaer and other mining advocates have warned that excessive royalty payments would force more mining companies to shift production overseas and would further entrench the U.S. reliance on foreign minerals.

"I told the Senate Energy and Natural Resources Committee that how they dealt with mining law reform would determine whether or not their vision for the energy future of the United States could be met," Skaer said. "If they adopted congressman Rahall's view or Senator Bingaman's proposal, they would guarantee we would not be able to meet our clean energy future."