While Rare Earth materials and permanent magnets are utilized in a wide range of products too diverse to list exhaustively (See Appendix A for a partial list), they are critical and enabling for many emerging Green Energy technologies, High Tech applications and Defense Systems, such as Hybrid Cars, Plug-in Hybrid Electric Vehicles (PHEVs), the latest generation of efficient wind power turbines, energy efficient compact florescent lighting, computer disk drives, cell phones, missile guidance systems, “ Smart Bombs,” and many other applications. We refer to these as “ Rare Earth Dependent Technologies.” Without Rare Earth magnets and materials, these technologies would not be commercially viable.
In today’ s world, nearly 100% of the global supply of Rare Earth elements, high power Neodymium
Iron Boron (NdFeB) magnets and all intermediate magnet materials are controlled by, produced in, or manufactured from materials sourced exclusively out of China. Consequently, all Rare Earth Dependant Technologies are completely reliant on Chinese sourced Rare Earth materials for their production. No technically viable alternatives to these Rare Earth materials are currently known for these applications. Without continued export of Chinese Rare Earth materials, there would be no means to manufacture these technologies outside of China. Both production of Rare Earth materials in China and export of those materials outside of China are strictly controlled by government imposed quotas.
Figure 1 is a simplified representation of the flow of Rare Earth materials (from the mine to magnet
production and beyond) as applied to NdFeB magnets for PHEVs.
In addition to controlling production of greater than 97% all Rare Earth elements on a world wide basis (including those relied upon by all NdFeB magnet producers outside China), China is also the world’s leading consumer of Rare Earth materials on a global basis, currently consuming approximately 60% of production and rising rapidly. Some leading experts project that by 2012, China’ s internal consumptionof critical Rare Earth materials will rise to meet or exceed their production(1). At the same time, Global requirements for Rare Earth materials outside China are expected to grow dramatically, fueled primarily by continued development and deployment of emerging Green Energy technologies such as HybridVehicles, PHEVs, Energy Efficient Lighting and Wind Power. Thus Global shortages of these materials may be seen as early as 2010, with shortages becoming severe by 2012(2). The implications of this trend are both obvious and disconcerting.
The Chinese government clearly recognizes the strategic nature of its Rare Earth deposits and is actively taking steps to insure the longevity and security of its Rare Earth resources for its own domestic consumption(3). This is illustrated by the fact that while Chinese production of Rare Earth materials is increasing annually, government issued export quotas are decreasing annually, thus protecting the flow of materials for rising internal consumption while at the same time reducing the amount of material exported to supply the needs of the rest of the world(4). Chinese export quotas have been decreased each year for the last 8 years. Most recently, China has announced that export quotas for the first half of 2009 are being reduced by approximately 34% over the same period last year.
The world’s two largest reserves of Rare Earth materials outside of China are in Mountain Pass, California and Mount Weld, Australia. Neither of these deposits are currently in production. Lynas Corporation (the current owners of the Mount Weld deposit), has begun development of a mine and concentration plant in Australia and a processing facility in Malaysia. Lynas has no announced plans to produce NdFeB magnets or intermediate materials. On the other hand, Mountain Pass, California is a fully developed facility with all necessary permits, infrastructure, power and transportation facilities necessary for full production in place. The full restart of the Mountain Pass facility requires only retooling of some existing facilities and reconstruction or replacement of limited equipment and facilities that are no longer suitable for use.The initial planned production upon full restart in 2012 is 40 million pounds REO per year (almost 7 million pounds of Nd and Pr oxides). This production can be achieved by using less than half the tons of ore that was required in the past to produce 40 millions pounds REO per year. Therefore, capacity can double with very little expansion capital.
While there are a number of smaller and lower grade deposits of Rare Earth materials around the world, they are yet to be shown to be economically viable and generally not of a size and quality that would result in a significant impact to global supply on an individual basis. See Appendix B
In order to insure the future security of domestic Green Energy, high-tech and advanced defense
technology (including America’ s ability to domestically produce Hybrid Vehicles, PHEVs and other
Rare Earth dependent Green Energy technologies), it will be necessary for the U.S. to establish domestic Rare Earth production, intermediate magnet materials production and ultimately NdFeB magnet production, or potentially face complete reliance on dwindling or nonexistent exports from China.
It is MM LLC’ s opinion that Chinese exports of Rare Earth materials will continue to dwindle as China strives to protect its critical Rare Earth resources for its own internal requirements. China’ s actions to conserve its Rare Earth materials for its own domestic consumption are illustrated in Figure 2(5).
Figure 2
The cumulative effect of global supply and demand conditions are probably best represented by
Figure 3 taken from Dudley Kingsnorth of Industrial Minerals Company of Australia(6). Mr.
Kingsnorth’ s graph shows the near-term supply gap for Rare Earth – a gap that will have to be filled
by non-Chinese producers like MM LLC.
Figure 3
Projected Gap in RE Supply and Demand
While the U.S. currently has no capacity whatsoever for production of NdFeB magnets and intermediate
magnet materials (metals and magnet alloys), it does control one of the world’ s largest and richest Rare
Earth deposits at the MM LLC, Mountain Pass, California facility. Although this significant deposit of
critical Rare Earth elements (once referred to by the U.S.G.S. as “ the greatest concentration of rare-earth
minerals now known” ) is not currently in full production of Rare Earth materials, it has recently been
acquired by MM LLC and plans are in place to bring the facility back into full production over the next
couple of years. In addition, with appropriate federal assistance for research and development and
capital costs, MM LLC is prepared to move forward to reestablish domestic manufacturing capacity for
both intermediate magnet materials and finished NdFeB magnets on an expedited basis. Due to the lead
time necessary to establish these capabilities in the U.S., work must be started in the near future in order
to avoid potential interruption in supply of these critical materials and components. Some leading
experts are predicting that global shortages of Rare Earth materials could be seen as early as 2010.(7)
The best route to insuring security of Rare Earth magnet supply for the needs of American industry and
defense purposes is to follow the example of China and develop a strong domestic Rare Earth industry
from mining to final magnet production, based on the responsible exploitation of America’ s own
strategic Rare Earth reserves. China takes its efforts in this regard so seriously, that it is currently
employing in excess of a thousand PhD level scientists working specifically in government sponsored
Rare Earth research efforts at all levels from efficient methods for the extraction and separation of Rare
Earth Elements to production of improved magnets and other end uses(8).
Because Mountain Pass is not currently in production, it represents a significant untapped source of Rare
Earth materials to feed America’ s domestic needs. Unfortunately, there are currently no domestic
manufacturers of NdFeB Magnets or intermediate magnet materials to utilize the output from Mountain
Pass and produce the finished components required by domestic manufacturers of electric vehicles and
other Rare Earth Dependant Technologies. MM LLC’ s long term goal is to fill this gap and reestablish
domestic manufacturing capacity for both intermediate magnet materials (metal and alloys) and finished
NdFeB magnets.
Assuming predictions regarding future Chinese exports of Rare Earth materials are correct, MM LLC
believes it is unlikely that anticipated growth in demand for Rare Earth materials can be met long term
absent development of and full production from both Mount Weld and Mountain Pass, as well as any
other commercially exploitable resources worldwide. Without production from either Mount Weld or
Mountain Pass, shortages are likely to become severe as demand continues to grow with the further
development of Green Energy and Rare Earth Dependant Technologies and significant volumes of Nd
may not be available outside of China, at any price. In short, it is MM LLC’ s opinion that in order to
meet anticipated global demand for Rare Earth materials beyond the next decade (and possibly sooner)
development and exploitation of all commercially viable deposits will be necessary on a worldwide
basis.
However, for true security of America’ s supply of the Rare Earth magnets and materials that will be
absolutely required to achieve our nation’ s goals of energy independence and national security, the US
needs to establish its own capability – from mine to magnets. With appropriate federal assistance for
research and development and capital costs, MM LLC is prepared to move forward to reestablish
domestic manufacturing capacity for both intermediate magnet materials and finished NdFeB magnets
on an expedited basis. Due to the lead time necessary to establish these capabilities in the U.S., work
must be started in the near future in order to avoid potential interruption in supply of these critical
materials and components.
For more information, please contact John L Burba, PhD at (303) 843-8041, (702) 400-6574 or
email john.burba@molycorp.com.
FOOTNOTES:
1 Kingsnorth, Dudley J. “ Rare Earths Supply: Alternatives to China.” 2008 SME Annual Meeting.
February 2008. Dudley J. Kingsnorth, Industrial Minerals Company of Australia.
2 Kingsnorth
3 “ Important Position of China in Global Rare Earth Market.” China Rare Earth
Information Center. Volume 13. No. 3. March 2007.
4 Chegwidden, Judith. “ Rare earth markets: Developments in the global supply demand balance.
Roskill Information Services Ltd. November 2008.
5 Chegwidden
6 Kingsnorth
7 Kingsnorth.
8 Xuehong, Dou (Chief Consultant of CREIC). “ Development of Sintered NdFeB Magnet Industry in
China.” China Rare Earth Information Center. Volume 13. No. 10. October 2007. and Volume 13. No. 11. November 2007.
Appendix A
A Sampling of Applications for Rare Earth Elements
(click for a larger view)
Appendix B
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