Source: USGS
Some people argue that we must reduce our use of oil because some oil is produced by dictators and countries with interests contrary to the United States. They argue we need to switch to different technology such as hybrids and renewables to reduce power these dictators could exert on the United States.[i]
But, as with everything else in life, there’s no such thing as a free lunch. It turns out that alternative energy technologies frequently depend on rare earth elements[ii]. We could be changing one dependency for another. Today China produces over 97 percent of the world’s rare earth supply. In contrast OPEC (Organization of the Petroleum Exporting Countries) produces about 1/3 of the world’s oil supply.
Rare Earth Elements
Rare earth elements are chemical elements that are used in many modern technological devices, including wind turbines[iii], fluorescent light bulbs, catalytic converters for diesel engines, superconductors[iv], electronic polishers, refining catalysts, hybrid car components (primarily batteries and magnets)[v], laser applications, optical-fiber communication systems, and cathode ray tube technology, among other uses. Despite their name, most rare earth elements are found in relatively high concentrations in the earth’s crust. The first rare earth element came from a mine in Sweden. Until 1948, India and Brazil were the principal sources of rare earth elements. South Africa became the world’s rare earth source in the 1950s,[vi] but by 1966 the Mountain Pass mine in California became the world’s largest producer of rare earth elements.[vii] From the mid 1960s through the mid 1980s, the Mountain Pass was the largest source of rare earth elements and the United States was self sufficient in the production of these resources. By the mid 1980s, the Chinese ramped up rare earth production and environmental and regulatory problems at Mountain Pass lead to a near shutdown at Mountain Pass. By 1999, 90 percent of rare earth elements required by U.S. industry came from Chinese sources.[viii]
China’s Strategy
In 1987, when rare earths’ use started to dramatically increase to make computers and other electronic gadgets, Chinese leader Deng Xiaoping said, “The Middle East has oil, but China has rare earth.” China has 53 percent of the world’s rare earth deposits. Most of the world’s rare earth comes from a single mine in Baotou in China’s Inner Mongolia, with much of the rest coming from small, often unlicensed mines in southern China.[ix] As the Organization of the Petroleum Exporting Countries has done with oil, China may now do with rare earth elements.[x]
China’s Ministry of Industry and Information Technology has drafted a six-year plan for rare earth production and submitted it to the State Council, the equivalent of the cabinet. Tighter limits on production and exports, part of the plan from the Ministry of Industry and Information Technology, would ensure China has the supply for its own technological and economic needs, and force more manufacturers to make their products in China in order to have access to the minerals. That is, Chinese officials are forcing global manufacturers to move factories to China by limiting the availability of rare earths outside China. “Rare earth usage in China will be increasingly greater than exports,” said Zhang Peichen, the deputy director of the government-linked Baotou Rare Earth Research Institute.[xi]
In the last 10 years, a 40,000-ton per year global market for rare earth has grown to 125,000 tons per year, and by 2014 demand is predicted to reach 200,000 tons per year. Yet China’s Ministry of Industry and Information Technology has cut the country’s target output from rare earth mines by 8.1 percent in 2009 and is forcing mergers of its mining companies in a bid to improve technical standards, according to the government-controlled China Mining Association, a government-led trade group.[xii]
Other Sources
Outside of China, only two projects are expected to be producing rare earth in the next five years: Molycorp Minerals/ Mountain Pass in California and Lynas Corporation’s Mount Weld in Australia. That’s because developing and operating a rare earth mine to Western environmental standards is expensive. China can extract the minerals for about a third of what it would cost in the West mostly because of lax environmental standards.[xiii]
Unocal used to own the Mountain Pass mine in California, which suspended mining in 2002 because of weak demand and a delay in an environmental review. China’s State-owned Cnooc almost acquired the mine in 2005 with an unsuccessful bid for Unocal, which was bought instead by Chevron. Chinese buyers tried to persuade Chevron to sell the mine to them in 2007, but Chevron sold it to Molycorp Minerals, a private American group.[xiv]
Molycorp hopes to generate profit at Mountain Pass by building an integrated manufacturing chain that starts with raw ore and ends with finished products ready for market. “We don’t want to be just a supplier of basic materials to other industries,” said Benfield, the operations chief. “We want to develop our own technologies so we can determine our own destiny rather than rely on others. We’re not just a mine.” It will cost $100 million to $400 million to make that plan a reality. [xv]
Environmental Issues
To get at the rare earth elements, powerful acid is pumped down bore holes. There it dissolves some of the rare earths, and the slurry is then pumped into leaky artificial ponds with earthen dams.[xvi] Those living near China’s rare earth mines and processing plants are experiencing environmental concerns from this procedure. Farmland surrounding a tailing lake in Baotou that stores the toxic rare earth elements before processing has been affected by seepage from the lake. Crops stopped growing after being irrigated by water from the lake, and the local council compensated the villagers for their loss.[xvii]
Conclusion
“If the purpose of putting hybrid vehicles on the road is to lower our dependence on foreign oil, and all we’re doing is buying cars that need Chinese rare earth materials, aren’t we trading one dependence for another?” asked Mark Smith, chief executive of Molycorp Minerals.[xviii] That use of rare earth elements along with their use in wind turbines and light bulbs makes one question whether we are trading OPEC’s sources of oil for China’s sources of rare earth elements in our going green strategy. Wouldn’t it be better to further all of our energy sources rather than picking favorites that have underlying issues of which most American citizens are not aware?
[i] See e.g. Thomas L. Friedman, What They Really Believe, N.Y. Times, Nov. 17, 2009, http://www.nytimes.com/2009/11/18/opinion/18friedman.html.
[ii] http://en.wikipedia.org/wiki/Rare_earth_element
[iii] A three-megawatt wind turbine uses around two tons of neodymium, a common rare earth that is used in hyper-efficient motors and generators.
[iv] Rare metals lower the friction on power lines, thus cutting electricity leakage.
[v] Toyota’s hybrid Prius car contains 25 pounds of rare earth elements.
[vi] http://en.wikipedia.org/wiki/Rare_earth_element
[vii] United States Geological Survey, Rare Earth Elements—Critical Resources for High Technology (2002), http://pubs.usgs.gov/fs/2002/fs087-02/fs087-02.pdf.
[viii] United States Geological Survey, Rare Earth Elements—Critical Resources for High Technology (2002), http://pubs.usgs.gov/fs/2002/fs087-02/fs087-02.pdf.
[ix] China’s monopoly on “green” minerals, December 9, 2009, http://www.upi.com/Science_News/Resource-Wars/2009/12/09/Chinas-monopoly-on-green-minerals/UPI-59441260381971
[x] China Tightens Grip on Rare Minerals, The New York Times, August 31, 2009, http://www.nytimes.com/2009/09/01/business/global/01minerals.html?_r=1
[xi] Ibid.
[xii] China’s monopoly on “green” minerals, December 9, 2009, http://www.upi.com/Science_News/Resource-Wars/2009/12/09/Chinas-monopoly-on-green-minerals/UPI-59441260381971/
[xiii] Ibid.
[xiv] China Tightens Grip on Rare Minerals, The New York Times, August 31, 2009, http://www.nytimes.com/2009/09/01/business/global/01minerals.html?_r=1
[xv] California metal mine regains luster, Los Angeles Times, October 14, 2009, http://articles.latimes.com/2009/oct/14/business/fi-rare-earth14?pg=2
[xvi] China Tightens Grip on Rare Minerals, The New York Times, August 31, 2009, http://www.nytimes.com/2009/09/01/business/global/01minerals.html?_r=1
[xvii] China’s monopoly on “green” minerals, December 9, 2009, http://www.upi.com/Science_News/Resource-Wars/2009/12/09/Chinas-monopoly-on-green-minerals/UPI-59441260381971
[xviii] Ibid.
