Problematic supply of rare earths will escalate into a crisis

From Mr Byron W. King.

Sir, Javier Blas (“In their element”, Analysis, January 29) explains the chemical basics of the rare earths issue. He also highlights the Chinese lock on total world output of rare earths, 93 to 97 per cent, depending on where you get your figures. Another point bears further comment. It’s not just “mining” rare earths ores that’s the problem. If obtaining rare earths were as simple as blasting ore, there would be little that’s newsworthy about the matter. There is a lot of rare earth ore out there, if you know where to look. The key to understanding how rare earths fit into modern technology is to understand the downstream processing deficit outside China.

Rare earths processing is rarer than rare earths. Rare earths require a complex series of chemical extractive steps to bring the raw ores to the form of useable oxide, or final-stage metal. Processing rare earths is far more complex than, say, extracting gold or silver from ore. There are currently no processing facilities in the west for extracting the high-end rare earths in industrially useable quantities.

Molycorp’s locale at Mountain Pass, California, has facilities on site that can bring raw ore to basic and intermediate stages of processing. But then the goods must make a trip to China for the final upgrade. Even the highly vaunted Japanese lack large-scale facilities for final processing, to refine rare earths to the required 99.9999 per cent pure state. (Sad to say, a mere 99.9 per cent just won’t cut it for many applications.) In the past 30 years, the Chinese have strategically made the necessary investment in rare earths processing facilities. No one else outside China has done so.

Why? Well, the Chinese made a conscious effort to drive foreign competition out of business along the way. Meanwhile the west, with its overwhelming belief in “free trade”, has placed its faith – and bet its farm – on long-term Chinese willingness to sell rare earths to eager buyers outside the Middle Kingdom.

Now we learn that Chinese output of rare earths is allegedly in shortage. Hence exports of rare earths from China have declined steadily in recent years.

One solution, of course, is for western companies to move their factories to China and become part of the national allocation system. How convenient.

The real answer to the problem is for western governments to place strategic priority on assisting private industries to rebuild a rare earths processing industry outside China, with capability to refine these exotic elements to final stages.

Can this happen? After all, most western governments are highly occupied with bailing out their banks and housing markets. Can they break away, and devote time and funds to rare earths?

Right now, the future supply of rare earths is merely a problem. Eventually, it will become a crisis.

Byron W. King,
Agora Financial,
Pittsburgh, PA, US