Clean energy proponents and policymakers have recently become interested in so-called “rare earths.” These are 15 elements known as lanthanoids in the periodic table, plus scandium and yttrium; uses include wind turbines and hybrid car batteries. Despite the name, they’re not truly rare. Much ado is being made over the fact that China presently controls 97% of the world’s rare earths, and recently announced its intent to crack down on illegal mining and smuggling.
But are we in danger of running out of rare earths, or is this a market-driven bubble? And should a potential shortage justify toxic strip mining in the Black Hills National Forest?
A British journalist recently obtained exclusive access to the world’s largest rare earths mine in Inner Mongolia. He describes his visit inside China's secret toxic unobtainium mine:
High on the frozen plains of Inner Mongolia, giant trucks rumble across the floor of a lunar-like crater so vast that it looks as if it might have been gouged out by a meteorite.
But the new-found wealth has come at an appalling environmental price, turning the town and the surrounding areas into a poisoned, arid wasteland littered with unregulated refineries where the rare-earths are extracted from rocks. The crude refineries squat along the valleys north of the town, surrounded by partly frozen red-coloured 'tailing lakes' up to a square mile in size where rocks are kept before being processed.
The land is scarred with toxic runoffs from the refining process and pock-marked with craters and trenches left by the huge trucks that transport the rocks across ice and mud. Rusting machinery lies scattered along the valley floor, giving it the appearance of a war zone.
Now, a Canadian company, Rare Elements Resources, wants to open a strip mine within the Black Hills National Forest, in northeastern Wyoming and about 15 miles from Devils Tower National Monument. The Bear Lodge Mountains are said to be one of
North America's best verified source of rare earths. A photo, obtained from the company website, depicts drilling on Bull Hill in July 2010:
This strip mine would extract minerals through toxic acid, and - if China is any precedent - leave the forest a "poisoned, arid wasteland." A rare earths mine in a desolate corner of California was shut down for environmental violations in the early 2000s, but now plans to reopen.
Senators Mark Begich (D-AK), Lisa Murkowski (R-AK), and Representative Mike Coffman (R-CO-06) accuse the Pentagon of dismissing the severity of the matter. Coffman plans to introduce a bill, similar to one he introduced last Congress, that would:
-- Create a strategic stockpile of rare earth metals within the Department of Defense that will help stimulate domestic production and protect the U.S. from further Chinese export restrictions.
--Make loans, backed by the federal government, available to start production should lending from the capital markets not be available.
--Establish coordinated responses from the federal government to address the problems preventing establishment of rare earth industry.
-- Utilize the Defense Production Act of 1950 to recreate our ability to manufacture rare earth metals, alloys and magnets in the U.S.
-- Establish a Rare Earth Policy Task Force across relevant Executive Branch agencies to expedite the development of alternative sources of supply.
By a strange coincidence, the only politician to whom Don Ranta, CEO of Rare Elements Resources, donated money in 2010 was Mike Coffman; Ranta
gave $700 to Coffman's 2010 reelection.
Sen. Mark Udall has also introduced S. 383, but it seems far milder:
-- The Secretary of the Interior is directed to analyze minerals, including global supply chains of same;
-- The Secretary of Energy is directed to "strengthen" the supply chain (no specific directive how to do this)
-- and a training program for workers is to be created.
Note the differences: Coffman's bill would stockpile resources and enable loans, while Udall's emphasizes quantification and jobs.
How real is the rare earths shortage? Reading investment blogs like Seeking Alpha (Rare earth mineral resource index triples on China's announcement) and Zero Hedge (rare earth wars), one gets the feeling that speculative investors are salivating. However, at least one potential heavy user of rare earths, Toyota, is working to cut its dependence.
My research for this piece took me to several vague references to the effect that rare earths used to be mined in India and Brazil, but production shifted to China for cost (not shortage-related) reasons: the Chinese undercut other countries on price just as they've undercut other countries on prices of other goods. A couple of meh views seem unimpressed by China's near-monopoly:
"Tomorrow, it'll be something else," said Alexander King, director of the Ames Laboratory in Iowa, run by the Energy Department. "The thing we need to learn is how to control the economics, to develop alternative materials on a very short turnaround."
But managing fluctuating supply is a "normal risk of doing business," said Pete Savagian, chief engineer for electric motors for General Motors Co. If rare earths run low or are priced out of the market, the automaker will adapt, he said.
"Rare earth magnets are great to have, but they're also not the only way," he said. "We'll go forward using the best methods we have."
Similarly, a forthcoming
Pentagon study will conclude that Beijing's monopoly will end and the United States will be able to get all the rare earths it needs within a few years. (Coffman and the Alaska Senators disagree.)
I sense a bubble, shaped by investor hype and fueled by mining-state politicians, of tulipmania proportions. We should not rush to poison our national forests in the name of not-so-rare earths.
