Rare Earth Elements

There are 17 Rare Earth Elements or REEs

15 within the chemical group called Lanthanides, plus Yttrium and Scandium.

The Lanthanides consist of the following:

Lanthanum,
Cerium,
Praseodymium,
Neodymium,
Promethium,
Samarium,
Europium,
Gadolinium,
Terbium,
Dysprosium,
Holmium,
Erbium,
Thulium,
Ytterbium and
Lutetium.

Rare earths are moderately abundant in the earth’s crust, some even more abundant than copper, lead, gold, and platinum. While some are more abundant than many other minerals, most REEs are not concentrated enough to make them easily exploitable economically. The United States was once self-reliant in domestically produced REEs, but over the past 15 years has become 100% reliant on imports, primarily from China, because of lower-cost operations.

The lanthanides are often broken into two groups:

Light rare earth elements or LREEs —

Lanthanum through Europium (atomic numbers 57-63)

Heavier rare earth elements HREEs —

Gadolinium through Lutetium (atomic numbers 64-71)

Yttrium is typically classified as a heavy element.

Technology that drives the Pentagon’s weapons program, the US auto industry and renewable energy ambitions is threatened by a lack of heavy rare earths for which China enjoys the global mining monopoly. Heavy rare earths are a class of 17 elements of a similar chemistry that are used in the production of everything from unnamed military drones, radar and navigation systems to high-performance magnets used in commercial vehicles, wind turbine technology and a host of consumer electronics.

The Pentagon was caught napping in 2010, when the reality of China’s global monopoly on heavy rare earths mining hit home with Beijing’s decision to reduce exports. The resultant scramble for these precious chemical elements has led the Pentagon to team up with Toyota Motor Corp and two Canadian companies--Ucore Rare Metals Inc. (UCU) and Matamec Explorations Inc. (MAT)--to develop North American mines.

Rumor has it that the Pentagon has entered into an exploratory partnership with Ucore. It has also struck deals with two North American magnet makers to study rare earths applications.

As for the auto industry, the situation is rather urgent. Car makers build rare earth metals into hybrid vehicles, and also into conventional cars for catalytic converters.

With the current consumption rates, demand for key rare earths elements—dysprosium, yttrium and terbium—will exceed supply very soon. Consumption continues to grow while production remains unchanged. Much of that consumption is represented by the automotive, aerospace and consumer electronics industries.

Toyota is working its way towards owning a 49% stake in a venture with Canada’s Matamec, and the two plan to mine a light rare earth element called dysprosium in Quebec, but are eyeing other potential elements in the area as well. (Toyotsu Rare Earth Canada has so far paid two installments of $8.5 million and $1.1 million to Matamec.)

These rare earths are even more valuable since China slashed exports. Still, prices have been up and down since then, most likely because manufacturers are wary of committing to production that depends on rare earths when they’re not sure supply will be there.

Will these North American forces be able to challenge China’s global monopoly, which essentially supplies 95% of the world’s rare earths demand? Are Rare Earth Metal Prices About To Rise?

There are only perhaps 5 or 6 rare earths mines in the entire world with enough developed reserves for viable production. To get to that stage we’re talking about hundreds of millions in funding.

Alaska is one focal point in this scramble to out-do China. Experts believe that Alaska’s Bokan Mountain deposit, run by Ucore, and may have the capacity to produce 3,000 tons/year of rare earths by 2016. Of course, first the mine needs to be built ($150 million), and Ucore is hoping that the State of Alaska will help foot the bill.

Not only are they hoping to out-do China in rare earths mining: They are hoping that China will actually become an importer of North American rare earths. The reasoning behind this: China’s own consumption is increasing and the fact that it hasn’t discovered any new deposits means that at the current pace, it could easily use up its own supplies.

In the meantime, the scramble is picking up intensity. In October and November, China halted around 50% of its rare earths smelting capacity in an attempt to get prices back up. Leading Chinese rare earths producers—Chinalco and Baotou Steel Rare Earth--halted production temporarily in early November.