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