How to loosen China’s chokehold on rare earths| The Big View podcast

Rare Earths: A Deep Dive into Supply Chains, Geopolitics, and Innovation

Key Concepts:

• Rare Earths: 17 chemically similar elements clustered in the periodic table, crucial for high-tech manufacturing (magnets, smartphones, lasers). Despite the name, their scarcity varies.
• Critical Minerals: A broader category including rare earths, lithium, nickel, copper, etc., with supply chains countries aim to secure.
• Light vs. Heavy Rare Earths: Categorization based on atomic number, impacting their specific applications (e.g., neodymium & praesodymium are key light rare earths; dysprosium & terbium are important heavy rare earths).
• Processing Bottleneck: China dominates rare earth processing (approx. 95% of global supply), creating a strategic choke point.
• Monazite Sand, Ionic Clay, Hard Rock: The three primary types of rare earth deposits, each requiring unique processing methods.
• Choke Point: A strategic point of vulnerability in a supply chain, where control can be leveraged for geopolitical advantage.

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I. The Strategic Importance of Rare Earths

The discussion begins by highlighting the growing geopolitical significance of rare earths, spurred by trade tensions between the US and China. These materials are essential components in a wide range of modern technologies, from magnets in electric vehicles to lasers and smartphones. China’s dominance in both mining (75-80% of global supply of the raw rock) and, critically, processing (95% of global supply) has created a “choke point” allowing it to exert influence. This has triggered a global scramble to diversify supply and establish independent refining capabilities, impacting discussions surrounding Ukraine and Greenland. The conversation clarifies the distinction between “rare earths” and the broader category of “critical minerals,” noting the latter encompasses a much wider range of materials. The US Geological Survey currently lists 60 critical materials, representing a significant portion of all mined commodities.

II. Defining Rare Earths & Understanding Deposits

Mel Sanderson clarifies the origins of the term “rare earths,” attributing it to their position in the periodic table as “earth elements.” While some are genuinely rare, others are more abundant. The key challenge isn’t necessarily availability in the earth’s crust, but the complex and costly processing required to extract and refine them. Successful mining depends on finding economically viable deposits with high concentrations of the desired elements. There are three main types of rare earth deposits:

• Monazite Sand: A mineral sand deposit.
• Ionic Clay: Found in weathered soils.
• Hard Rock: Requires traditional hard rock mining techniques.

Each deposit type has a unique chemical composition, necessitating tailored processing methods. The success of a mining project hinges on “cracking” this chemical code to produce a valuable concentrate.

III. Light vs. Heavy Rare Earths: A Technical Distinction

The discussion delves into the difference between light and heavy rare earths, based on their atomic number, not physical weight. Praesodymium and Neodymium are highlighted as the most important light rare earths for current technologies, while Dysprosium and Terbium are crucial heavy rare earths. This distinction is important because different applications require different ratios of these elements.

IV. China’s Dominance in Processing: A Historical Perspective

China’s control over rare earth processing is attributed to a deliberate decision by Western countries, particularly the US, approximately 25 years ago to avoid “nasty, dirty industrial activities” within their borders. This led to a decline in domestic mining and processing infrastructure. China capitalized on this by accepting the environmental costs associated with processing, positioning itself as the dominant supplier. The process itself is environmentally challenging, involving the use of strong acids (sulfuric and hydrochloric) and generating radioactive byproducts (uranium and thorium) requiring careful containment.

V. The Quest for Cleaner Processing Technologies

The conversation explores potential solutions for cleaner rare earth processing:

• Vaporization: A high-temperature process already used for other materials. (CVMR is cited as a company specializing in this method).
• Enhanced Magnetic Separation: Expanding the use of magnetic separation techniques.
• Biological Agents (Bioleaching): A promising approach involving genetically engineered enzymes to selectively extract individual rare earth elements from solutions. American Rare Earths is working with DARPA on this technology.

The challenge lies in balancing environmental concerns with the energy intensity of processing and the need for economically viable solutions. Water usage is also a significant consideration.

VI. Economic Viability & Government Intervention

The discussion addresses why private investment in rare earth projects has been historically limited:

• Long Return on Investment: Mining projects typically have a 20-50 year timeframe to reach profitability.
• Negative Perception: Mining and processing are often viewed negatively due to environmental concerns.
• Chemical Complexity: The unique chemistry of each deposit adds uncertainty.
• Price Manipulation: China’s control over the market allows it to influence prices, making it difficult to assess project viability.

Government intervention is seen as necessary to kickstart the industry. The US government is taking steps such as:

• Establishing a Price Floor: The Department of War has set a price of $110/ton for certain materials, providing stability for companies like MP Materials.
• Direct Equity Stakes: Taking minority ownership in strategically important mining companies.
• Public-Private Partnerships: Collaborating with banks to encourage private investment.
• Funding for New Facilities: Supporting the construction of metal and magnet production facilities.

The estimated cost to establish a fully independent rare earth supply chain globally is around $1 trillion, necessitating government-private sector collaboration.

VII. The Search for Substitutes & Future Outlook

The conversation concludes with a discussion of potential material substitutes. Currently, there are no viable substitutes for the core four rare earths (Praesodymium, Neodymium, Dysprosium, and Terbium) used in critical magnet applications. This makes rare earths a more secure investment compared to materials like lithium, which have more readily available substitutes. Rare earths are essential in both electric and conventional vehicles, highlighting their broad importance.

Notable Quotes:

• “Rare earths are neither rare nor are they really earths.” – Mel Sanderson, highlighting the misleading nature of the term.
• “Somebody somewhere was still going to have to mine this stuff and make this stuff.” – Mel Sanderson, explaining China’s strategic decision to embrace the environmental costs of processing.
• “The ultimate objective for any rational country is to be able to site that entire supply chain from rock to metal and magnet within their borders.” – Mel Sanderson, outlining the ideal scenario for supply chain security.

Data & Statistics:

• China controls approximately 75-80% of the global rare earth mining market.
• China processes approximately 95% of the world’s rare earth materials.
• The US government has set a price floor of $110/ton for certain rare earth materials.
• Establishing a global rare earth supply chain is estimated to cost $1 trillion.
• A deposit in Wyoming contains approximately 2 billion tons of total rare earth oxide, potentially supplying the US for over 100 years.

Conclusion:

The conversation paints a complex picture of the rare earth landscape. China’s dominance in processing presents a significant strategic vulnerability for the West. Addressing this requires a multi-faceted approach: investing in cleaner processing technologies, government support for domestic mining and refining, and fostering international partnerships. While substitutes for rare earths are currently limited, innovation in processing and a commitment to securing supply chains are crucial for maintaining technological competitiveness and national security.