EDITOR: | October 10th, 2013 | 10 Comments

More please: The critical contributions of Rare Earth Elements to the ‘new’ economy

| October 10, 2013 | 10 Comments
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Rare earth elements… driving the renewable energy and clean tech future.

Let me begin by clarifying, I am not an environmentalist, unless it makes sense economically. Irrespective of the deeply divided political squabbling in the US about the importance of renewable energy and clean technology to long-term economic and environmental challenges, there is a strong consensus among governments, the corporate sector, and investors that renewable energy will drive economic growth. However, even the most optimistic among us regarding this developing industry (still very much in its early stages) must acknowledge one harsh reality: the sector faces challenges. Exceptional challenges. Long-established, highly profitable reigning industries (with tremendous influence among influencers), coupled with challenging financing hurdles are obviously obstacles to clean-tech expansion. But another drawback for clean technology is one that hasn’t received enough attention.

In order to transition towards a cleaner, healthier and more robust economy fueled by renewable energy and clean technology, rare earth elements (or REEs, subdivided into two categories; light rare earth elements or LREEs, and the more-valuable heavy rare earth elements or HREEs) have to be mined. REEs are needed to produce the requisite green energy infrastructure and associated products. That is a bit of an understatement. Rare earth elements (metals, oxides, phosphors and other REE derivatives) are absolutely essential ingredients for creating the technologies that reduce US and global dependence on hydrocarbon energy sources.

As most InvestorIntel readers are already aware, thanks to Publisher, Editor-in-Chief and ‘Queen of Rare Earths’ Tracy Weslosky, what makes rare earths ‘rare’ is not the relative scarcity (i.e. oil). Rare earth elements are considered rare because they occur, widely dispersed in the earth’s crust, rather than in concentrated ores. REEs (and graphite and, soon, graphene will) provide critical contributions to renewable energy technology, including in solar power, wind turbines, lithium-ion batteries, and all electric motors.

Some wind turbines contain over 500 pounds of rare earth elements. Each and every Prius that rolls off the Toyota assembly line in Tokyo carries almost 30 pounds of REEs (Tesla Motors wasn’t able to respond by the publication deadline of this article). More people need to know that without rare earth elements, it would be completely impossible to manufacture the building blocks that operate these technologies. According to industry experts, with more supply, demand for REEs will increase. And, obviously, more REEs will be required as these technologies (still in their respective early stages) become more and more mainstream. Wind turbines and electric vehicles, in particular, rely on rare earths neodymium and dysprosium. A recent study conducted by a US private research university concluded that global demand for neodymium and dysprosium will outstrip supply over the medium- and mid-term if worldwide production does not increase by 8% for neodymium and 14% for dysprosium. The conclusion? Present rare earth production is not increasing at a sustainable level.

The problem of future access to rare earth resources is exacerbated by China’s recent imposition of REE export quotas, which caused some users of REEs to charge REE surcharges to their customers. A shrinking supply of REEs guarantees higher costs for industries desperate to be more cost-competitive and that are striving to improve performance, while lowering price (remember, the world expects the price of a particular technology to come down over time). The end result? This conundrum could set back wind and solar at a time when we need to advance them. Who, in their right mind, could say we do not need more energy diversity — especially in the long term?

A fundamental obstacle in the way of increasing REE production and processing is that >95% percent of all rare earths processing takes place in China. While America possesses almost one-fifth of the world’s proven rare earths reserves, it does not have the industrial capacity to process mined rare earths into usable formation. In other words, rare earths mined in the United States must be shipped to China for processing, dramatically (and needlessly) increasing the cost of REEs. After talking to Jack Lifton, I’ve concluded that the current Chinese REE paradigm is, essentially, our fault. We have et the Chinese do the heavy lifting.

The answer to America’s REE dilemma is simple (at least on paper) and should be an example for the rest of the Western world — the United States needs to stimulate responsible expansion of rare earth element production now. For starters, the government needs to carefully evaluate the necessity of the copious amount of Oil & Gas subsidies. They’re overflowing. The ONG industry is sophisticated, advanced and profitable. When the top players in the industry are the richest businesses on earth, said players shouldn’t need government assistance. Next, re-establish the American rare earths processing industry. Develop academic and industrial research centers and get out of the way… allow the United States to take advantage of its own domestic rare earth resources. Next, promote free and fair trade of all REE materials among all producers and users of rare earths, so that absolutely NO single nation has such a grossly unfair advantage over the rest of the world. This issue is just too important. According to my esteemed colleague and industry expert Dan McGroarty, expedite permitting and create national and international REE stockpiles to ensure a long-term supply; increasing availability and opportunities for ongoing research and development of renewable energy products. Without continually advancing R&D we’re doomed. Work with environmental stakeholders on REE mining expansion to establish a crystal-clear understanding that rare earth mining is a necessary step to a low hydrocarbon future.

The simple truth is that every single rare earths and critical minerals exploration company is working diligently to create a more secure, fairer, brighter and more energy-diverse future. It is vital that many of rare earth explorers survive, advance their projects and go into production so they can continue to advance and supply a better tomorrow. The promise of renewable technology is real. It going to happen, whether or not we keep the industry hogtied or let it run free. We must address the challenges and issues that are slowing our progress and our ability to achieve to a more prosperous and secure future.


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Comments

  • tek

    Renewables are the future and REEs are the key. But neither will be given full rein until the “right” people own most of the materials and technology, meaning the Oil and Gas Consortium and their Financiers. Different game: New players: Same Owners.

    October 10, 2013 - 3:50 PM

    • Seriously

      Did you even read this article?

      These “right” people, go by the big bad name of China.

      The US needs to wake up and take some lessons from China who is 100% driving the market. We, as Americans, need to become more educated and less miss-educated on the issue at hand. Everyone wants renewable energy, everyone wants wind power, in order to achive those things we still need mining (heavily) and drilling. It’s time for liberals to embrace that.

      October 16, 2013 - 9:46 AM

  • hackenzac

    Define ‘economic sense’ please. What’s the currency? What’s the bottom line? If you were parched in the desert, a bottle of water has more currency than a wad of cash so economic sense is quite subjective, just ask China. They built an Olympic Village that couldn’t be seen because the air was so thick with filth. When you can’t breathe, air is currency. Did it make economic sense to remove lead from paint? The paint companies didn’t think so but for the rest us paying the price, of course it did. Cleaner fuel has always made economic sense, always. It’s only now that non environmentalists see it. It’s tough to keep supply lines open all the way to Bandahar so even the Army is seeing the light. It’s not just hybrid cars driving it. It’s hybrid tanks and humvees.

    October 10, 2013 - 11:46 PM

  • GoBucks

    Huh.
    How about this for an obstacle to alternatives–rare earths or not, they can’t pay for themselves. We’ve been farting around with this stuff for about 40 years and they still need massive taxpayer bucks to stay afloat.
    It’s always…”We just need a few more years.,..a few more tens of billions of your dollars…THEN it’ll work!!”

    I’ve had it. No more subsidies. Sink or swim, boys and girls.

    October 11, 2013 - 10:31 AM

    • Ty Dinwoodie

      I understand and acknowledge your point. Three years ago, I was saying exactly what you just posted. Almost verbatim (I may have even used the word ‘farting’). Until I did some serious digging.

      GB, would you support the renewable energy industry getting the same governmental support (in all of its various form$) that the ONG industry gets? How about the same support ONG received in its early stages?

      October 11, 2013 - 11:22 AM

  • GoBucks

    Hmmm…how about the wind and solar people pay royalties to us when their facilities generate power on federal lands? Like the oil companies do when they produce oil on federal lands.

    The oil companies get your standard business deductions. Equipment depreciation…salaries and wages…R&D…they do NOT get a couple cents subsidy per kwh generated…like wind and solar do.

    Alternatives should get the standard business deductions, yes, of course. But that’s it.

    And they should get their behinds beat for killing endangered birds.

    October 14, 2013 - 1:13 PM

    • Seriously

      Seriously, GoBucks?

      “They should ge their behinds beat for killing endangered birds.”

      Because they do that on purpose right?

      “how about the wind and solar people pay royalties to us when their facilities generate power on federal lands”

      Who is this “us,” the government? You do know that oil companies pay royalties on state and Indian lands as well, right? This statement just does not make sense.

      Do you even realize how much it costs to build a wind turbine and do you understand their inefficiency?

      Energy companies are trying to find ways to efficiently and effectively produce energy. Why should there not be additional incentives to these companies who are “farting” around billions of dollars into these innovations.

      Do you understand how important this industry is to the world?

      October 16, 2013 - 9:38 AM

      • GoBucks

        Oh yeah….we’re saving the world from Anthropogenic Climate Change.

        I was going to write a blow-by-blow response to you, but I decided it would be a waste of time.

        Hey, “Seriously”…how about you spend a little less time insulting people who want to have a serious, frank discussion?

        Just asking.

        October 17, 2013 - 1:40 PM

  • Seriously

    Ty –

    I think this is a great article aside from your take on this government assistance. Yes, it is absolutely a highly profitable business, but this industry takes a lot of risks, spends a lot of money to sometimes get no results.

    Do you think that ONG, which drives the economy, should receive less incentives, while we feed more money to people who do nothing to positively impact our economy, such as welfare? Do you understand how much of the US budget is driven by ONG production, how much revenue the country as well as states receive from ONG production?

    October 16, 2013 - 9:59 AM

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